Key benchmark indices extended intraday gains in morning trade, with the barometer index, the S&P BSE Sensex, hitting its highest level in more than 7 months. At 10:16 IST, the Sensex was up 126.28 points or 0.47% at 26,794.24. The Nifty 50 index was currently up 40.50 points or 0.5% at 8,200.60. Data showing acceleration in growth in India's gross domestic product in Q4 March 2016, a sharp pick up in growth in core sector in April 2016 and fiscal deficit meeting the target for fiscal year 2015-16 aided the upmove on the bourses.
The Sensex rose 171.14 points or 0.64% at the day's high of 26,839.10 in morning trade, its highest level since 30 October 2015. The barometer index rose 3.90 points or 0.01% at the day's low of 26,671.86 in early trade. The Nifty rose 49.70 points or 0.6% at the day's high of 8,209.80 in morning trade. The index rose 13.65 points or 0.16% at the day's low of 8,173.75 in early trade.
On the macro front, the latest data showed that India's gross domestic product (GDP) growth accelerated to 7.9% in Q4 March 2016 compared with a revised reading of a growth of 7.2% in Q3 December 2015. For the fiscal year 2015-16, GDP grew 7.6%, which was higher than 7.2% growth recorded in 2014-15. The government released the GDP data after market hours yesterday, 31 May 2016. Another data released by the government after market hours yesterday, 31 May 2016, showed the output of eight core infrastructure industries carrying 38% of the weight in the Index of Industrial Production (IIP) increased at 18-months high pace of 8.5% in April 2016.
Meanwhile, the finance ministry said that as per the provisional accounts for 2015-16, the fiscal deficit in 2015-16 stands at 3.9% of GDP, meeting the target set by the government. This is a significant improvement over the fiscal deficit of 4.1% in 2014-15 and 4.7% in 2013-14. Revenue deficit has also shown significant improvement due to a sharp increase in capital expenditure of the central government. Revenue deficit improved to 2.5% of GDP in 2015-16 from 2.9% in 2014-15. There was also an increase in the Plan Expenditure in 2015-16 despite substantial increase in share of tax devolution to the States.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,225 shares rose and 560 shares declined. A total of 90 shares were unchanged. The BSE Mid-Cap index was currently up 0.48%. The BSE Small-Cap index was currently up 0.59%. Both these indices outperformed the Sensex.
Telecom stocks edged higher. Bharti Airtel (up 1.64%), Idea Cellular (up 0.83%), Reliance Communications (up 1.17%), Tata Teleservices (Maharashtra) (up 0.78%) and Mahanagar Telephone Nigam (up 0.8%) rose.
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Bharti Infratel was up 1.1%. Bharti Infratel is a telecom tower arm of Bharti Airtel.
Cement stocks rose. Shree Cement (up 1.27%), Ambuja Cements (up 0.37%), ACC (up 0.45%) and UltraTech Cement (up 0.27%) edged higher.
Grasim Industries was off 0.02%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Index heavyweight and cigarette major ITC rose 2.1% at Rs 359. The stock hit a high of Rs 359.05 and a low of Rs 353 so far during the day.
Maruti Suzuki India (MSIL) was down 0.09% at Rs 4,164.05. The stock hit a high of Rs 4,199.90 and a low of Rs 4,157 so far during the day. MSIL during market hours today, 1 June 2016, said its total sales rose 7.1% to 1.23 lakh units in May 2016 over May 2015. Domestic sales rose 10.6% to 1.13 lakh units in May 2016 over May 2015. Exports declined 20.8% to 9,872 units in May 2016 over May 2015.
MSIL announced after market hours yesterday, 31 May 2016, that it will resume manufacture of vehicles at its Gurgaon facilities from second half of 1 June 2016. Certain operations in the Manesar campus, including casting and manufacture of transmissions, will also resume in the second half on 1 June 2016, MSIL said. Subros and MSIL are jointly working on options to obtain supply of components from other facilities and gradually bring operations back to normal, MSIL said. MSIL had to suspend operations at its facilities from second half of 29 May 2016, owing to a fire accident at the Manesar facilities of its supplier Subros.
In overseas stock markets, Chinese stocks witnessed a mixed trend after the release of the monthly manufacturing and nonmanufacturing data. In mainland China, the Shanghai Composite index was currently up 0.07%. In Hong Kong, the Hang Seng index was currently down 0.02%. An official measure of China's manufacturing sector held steady in May while a private gauge edged down slightly. China's official purchasing managers' index for manufacturing remained at 50.1 last month, the same level as in April and the third consecutive month the index kept above 50, the line separating expansion from contraction. The competing private Caixin manufacturing PMI index slipped to 49.2 in May from 49.4 in April, the fifteenth consecutive month of contraction. Another data showed that China's official nonmanufacturing PMI fell to 53.1 from 53.5 in April.
US stocks ended mostly lower yesterday, 31 May 2016, as investors turned cautious ahead of key economic reports this week for indications on the pace and timing of the next interest rate hike. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The Federal Reserve has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
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