Strong buying demand in index pivotals triggered a sharp rally on the bourses Monday. Sentiment was boosted by steep slide in crude oil prices. India imports majority of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure.
Today's rally was also fuelled by hopes of rate cut by the Reserve Bank of India (RBI). RBI's Monetary Policy Committee (MPC) meeting is scheduled from 3 to 6 June 2019. The MPC of the RBI will announce its resolution under the Second Bi-monthly Monetary Policy Statement for 2019-20 on Thursday, 6 June 2019.
The Sensex surged 553.42 points or 1.39% to settle at 40,267.62, its record closing high. The index rose 594.70 points or 1.50% at the day's high of 40,308.90. The index fell 3.18 points, or 0.01% at the day's low of 39,711.02.
The Nifty 50 index spurted 165.75 points or 1.39% to settle at 12,088.55, its record closing high. The index rose 180.25 points, or 1.51% at the day's high of 12103.05. The index fell 2.70 points, or 0.02% at the day's low of 11920.10.
Domestic stocks drifted higher in early trade on buying demand in index pivotals. Key indices marched ahead as the session progressed. The Sensex hit day's high above the psychological 40,000 level and the Nifty hit day's high above the psychological 12,000 level.
Broader market lagged key benchmarks. The S&P BSE Mid-Cap index rose 0.90%. The S&P BSE Small-Cap index rose 0.48%.
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The market breadth, indicating the overall health of the market, was negative. On the BSE, 1193 shares rose and 1416 shares fell. A total of 160 shares were unchanged.
Among the sectoral indices on BSE, the S&P BSE Auto index (up 1.93%), the S&P BSE Energy index (up 1.83%) and the S&P BSE Metal index (up 1.77%), outperformed the Sensex. The S&P BSE Power index (up 0.49%), the S&P BSE Capital Goods index (up 0.36% ) and the S&P BSE Utilities index (up 0.24%), underperformed the Sensex.
Auto shares were in action after monthly sales data. Maruti Suzuki India rose 2.89%. Maruti Suzuki India reported 22% decline in total vehicle sales to 1.34 lakh units in May 2019 over May 2018. Total domestic passenger vehicle sales declined 25.1% to 1.21 lakh units. Total export sales fell by 2.4% to 9089 units. The announcement was made on Saturday, 1 June 2019.
Tata Motors rose 1.19%. Tata Motors Commercial and Passenger Vehicles Business sales in the domestic market in May 2019 were reported at 40,155 units, a drop of 26%, as against 54,290 units sold in May 2018, as market sentiments continued to be muted. The announcement was made on Saturday, 1 June 2019.
Mahindra & Mahindra (M&M) rose 1.15%. M&M Benefit Trust (the Trust) which forms part of the promoter group of the company, has today sold 1.92 crore equity shares (treasury stock) representing 1.54% of the total paid up equity share capital of the company. The sale has been executed on the stock exchange(s), at a gross price of Rs 648 per share. Following the sale, the shareholding of the promoters and promoter group of the company has come down from 20.44% to 18.90% of the total paid up equity share capital of the company. The announcement was made during market hours today, 3 May 2019.
M&M reported a 3% decline in total vehicle sales to 45,421 units in May 2019 over May 2018. Total domestic sales declined 2% to 43,056 units in May 2019 over May 2018. Total exports declined 22% to 2,365 units in May 2019 over May 2018. The announcement was made on Saturday, 1 June 2019.
Further, M&M's Farm Equipment Sector (FES), reported a 16% decline in total sales to 24,704 units in May 2019 over May 2018. Total domestic sales declined 17% to 23,539 units in May 2019 over May 2018. Total exports increased 3% to 1,165 units in May 2019 over May 2018.
Eicher Motors rose 0.29%. Eicher Motors said that its unlisted material subsidiary, VE Commercial Vehicles, reported a 19.7% decline in the total vehicle sales to 4,801 units in May 2019 over May 2018. The announcement was made on Saturd
Escorts rose 1.32%. Escorts announced an 18% fall in the total tractor sales to 6,827 units in May 2019 over May 2018. The total domestic tractor sales declined 19.8% to 6,488 units. The total exports were up by 42.4% to 339 units. The announcement was made on Saturday, 1 June 2019.
SML Isuzu rose 2.91%. SML Isuzu reported a 17.1% increase in total sales to 1,689 units in May 2019 over May 2018. The announcement was made on Saturday, 1 June 2019.
Two-wheeler stocks were in demand. Bajaj Auto rose 3.92% after the company reported 3% increase in total vehicle sales to 4.19 lakh units in May 2019 over May 2018. Bajaj Auto's total domestic vehicle sales increased 5% to 2.35 lakh units. Total export rose by 1% to 1.83 lakh units in May 2019 over May 2018.
In a separate announcement during trading hours today, Bajaj Auto said that it has agreed on new electric vehicle alliance with KTM Industries AG. As per the deal, Bajaj Auto and KTM Industries AG will develop a common 48 volt electric two-wheeler platform in the power range 3 to 10 kW for planned serial production in India. This platform will support different product variants - scooters, mopeds, small mopeds, under brands of both partners. The serial production will start at Bajaj's production site in Pune by 2022.
Hero MotoCorp rose 6.01%.The company reported sales of 652,028 units of motorcycles and scooters in the month of May 2019. The company recorded a sequential increase in sales compared to the previous month (April 2019) when it sold 574,366 units of two-wheelers.
TVS Motor Company rose 4.26%. The company registered sales of 307,106 units in May 2019 as against 309,865 units in the month of May 2018.
Shares of state-run oil marketing companies rose after crude oil prices dropped in the international commodity market. BPCL (up 1.63%), HPCL (up 0.03%) and Indian Oil Corporation (up 2.17%) advanced.
Lower crude oil prices could reduce under-recoveries of public sector oil marketing companies (PSU OMCs) on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
Aviation stocks rose after jet fuel prices were reduced from 1 June 2019. Prices of ATF constitutes approximately 50% of operating expenses of Indian aviation companies.
SpiceJet (up 4.18%) and InterGlobe Aviation (up 0.97%) edged higher. Jet Airways (India) was down 3.15%.
For Delhi, the price of Aviation turbine fuel (ATF) was cut by 61.05 per kiloliter at 65,006.8 per kiloliter, in Kolkata it has been reduced by 305.25 per kiloliter at 70,421.41 per kiloliter, in Mumbai fuel price has been trimmed by 83.25 per kiloliter at 64,946.04 per kiloliter, and in Chennai it has been reduced by 229.10 per kiloliter at 66,069.55 per kiloliter.
MOIL fell 1.17% after the company said it revised prices of different grades of Manganese Ore and other products, effective from 1 June 2019. MOIL announced that the prices of ferro grade, SMGR (Mn30% & Mn25%), fines and chemical grades of ore have been decreased by about 7.5% on the existing prices prevailing since 1 April 2019. The announcement was made on Sunday, 2 June 2019.
On the economic front, growth in India's manufacturing industry moved up a notch in May as companies responded to strengthening demand conditions by lifting output, quantities of purchases and employment to greater extents. Business sentiment also ticked higher. The Nikkei India Manufacturing Purchasing Managers' Index, improved to 52.7 in May from 51.8 in April.
Meanwhile, India's economic growth rate slowed to five-year low of 5.8% in January-March 2018-19, due to slackness in agriculture and manufacturing sectors, official data stated. The Central Statistics Office also revealed that GDP growth during the 2018-19 fiscal stood at 6.8%, lower than 7.2% in the previous financial year. The data was released after market hours on Friday, 31 May 2019.
The combined Index of Eight Core Industries stood at 127.5 in April 2019, which was 2.6% higher as compared to the index of April 2018. The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
The total gross GST revenue collected in the month of May 2019 is Rs 1,00,289 crore of which CGST is Rs 17,811 crore, SGST is Rs 24,462 crore, IGST is Rs 49,891 crore (including Rs 24,875 crore collected on imports) and Cess is Rs 8,125 crore (including Rs 953 crore collected on imports). The revenue in May 2018 was Rs 94,016 crore.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 69.325, compared with its close of 69.70 during the previous trading session.
Crude oil prices dropped amid stalling demand as trade wars fanned fears of a global economic slowdown. Brent for August 2019 settlement was down 87 cents at $61.12 a barrel. The contract fell $3.34 a barrel or 5.11% to settle at $61.99 a barrel during the previous trading session.
A decline in oil prices and expectations of a rate cut softened yields on government bonds, which slipped below 7% for first time since November 2017. Yield on India's 10-year benchmark bonds fell to 6.998%.
Overseas, European shares were trading lower while Asian stocks ended mixed on Monday amid increasing concerns over the state of global trade.
The Caixin/Markit China manufacturing Purchasing Managers' Index (PMI) for May was 50.2, witnessing a flat performance over month. PMI readings above 50 indicate expansion, while those below that signal contraction. Growth of new orders grew in May and the rate of new business growth improved slightly in the last month, Caixin said in a statement on Monday. However, the survey noted that business confidence slipped to the lowest level since the survey series began in April 2012.
US stocks closed sharply lower Friday, after President Donald Trump unexpectedly announced plans to impose tariffs on imports from Mexico in an attempt to pressure the country to stem the flow of migrants across the U.S. border.
Late Thursday, Trump announced that the U.S. would impose a 5% tariff on all goods from Mexico until that country stops the flow of illegal immigrants into the country. He said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by October 1.
In US economic data, the University of Michigan's final consumer sentiment index reading for May came in at 100 versus an initial 102.4, but remained up from 97.2 in April.
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