Metal, banking and capital goods stocks led a rally on the domestic bourses triggered by expectations that US interest rates will not be raised quickly, with the barometer index, the S&P BSE Sensex, surpassing the psychologically important 25,000 mark. The Sensex jumped 438.12 points or 1.76% to settle at 25,338.58. The 50-unit Nifty 50 index rose 138.20 points or 1.82% to settle at 7,735.20. The two benchmark indices hovered in positive zone throughout the trading session after opening with upward gap. The Sensex and the Nifty, both, hit 12-week closing high. The two benchmark indices snapped a two-day losing streak. Barring the S&P BSE Telecom index, all other sectoral indices on BSE registered gains.
World stocks rose as investors welcomed the latest signal from the US Federal Reserve that it would move slowly to raise interest rates in the US.
Bank stocks edged higher after the Reserve Bank of India (RBI) clarified some of the provisions relating to the Marginal Cost of Funds based Lending Rate (MCLR) system, which comes into effect from 1 April 2016. Bharat Heavy Electricals (Bhel) edged higher after the company announced successful commissioning of a 250 megawatts (MW) coal-based thermal power plant (TPP) in Bihar.
Steel stocks gained on reports that the government has extended safeguard import taxes on some steel products until March 2018 to curb imports of cheap Chinese steel and shield domestic mills. Tata Steel surged after the company announced that it has decided to explore all options for portfolio restructuring including the potential divestment of its UK subsidiary Tata Steel UK, in whole or in parts.
Shares of HealthCare Global Enterprises (HGEL), a provider of speciality healthcare in India, slumped on its debut.
The Sensex rose 438.12 points or 1.76% to settle at 25,338.58, its highest closing level since 6 January 2016. The index jumped 455.86 points, or 1.83% at the day's high of 25,356.32. The barometer index rose 154.96 points, or 0.62% at the day's low of 25,055.42.
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The Nifty rose 138.20 points or 1.82% to settle at 7,735.20, its highest closing level since 6 January 2016. The Nifty rose 144.95 points, or 1.91% at the day's high of 7,741.95. The index rose 46.45 points, or 0.61% at the day's low of 7,643.45.
The broad market depicted strength. More than two stocks rose for each stock that dropped on BSE. 1,871 shares rose and 756 shares fell. A total of 153 shares were unchanged. A number of stocks forming part of the broad based BSE Small-Cap index registered gains exceeding 3%. The BSE Small-Cap index rose 1.87%. The BSE Mid-Cap index rose 1.81%. Both these indices outperformed the Sensex.
Among the sectoral indices on BSE, the S&P BSE Realty index (up 3.85%), the S&P BSE Bankex (up 3.13%), the S&P BSE Metal index (up 3.06%), the S&P BSE Capital Goods index (up 2.73%), the S&P BSE Industrials index (up 2.58%), the S&P BSE Power index (up 2.53%), the S&P BSE Basic Materials index (up 2.49%), the S&P BSE Utilities index (up 2.3%), the S&P BSE Finance index (up 2.11%), the S&P BSE Healthcare index (up 1.99%), the S&P BSE Oil & Gas index (up 1.98%), the S&P BSE Consumer Durables index (up 1.83%) outperformed the Sensex. The S&P BSE FMCG index (up 1.67%), the S&P BSE Auto index (up 1.53%), the S&P BSE Consumer Discretionary Goods & Services index (up 1.4%), the S&P BSE Energy index (up 1.34%), the S&P BSE IT index (up 1.03%), the S&P BSE Teck index (up 0.75%) and the S&P BSE Telecom index (down 0.13%) underperformed the Sensex.
The total turnover on BSE amounted to Rs 2406 crore, lower than turnover of Rs 3595.61 crore registered during the previous trading session.
In overseas stock markets, Asian and European stocks edged higher tracking overnight gains in US shares as investors welcomed the latest signal from the US Federal Reserve that it would move slowly to raise interest rates in the US. US stocks edged higher yesterday, 29 March 2016, after Federal Reserve chairwoman Janet Yellen in a speech in New York reiterated a need to proceed cautiously in lifting interest rates in the backdrop of weaker-than-expected growth overseas and a cloudy US inflation outlook.
Capital goods stocks gained. ABB India (up 1.95%), BEML (up 0.34%), Bharat Electronics (up 1.98%), Crompton Greaves (up 1.88%), L&T (up 3.07%), Siemens (up 2.81%) and Thermax (up 3.99%) rose.
Bharat Heavy Electricals (Bhel) rose 3.47% after the company announced successful commissioning of a 250 megawatts (MW) coal-based thermal power plant (TPP) in Bihar. The 250 MW unit has been commissioned at the upcoming greenfield 1,000 MW Nabinagar Thermal Power Project which is being set up by Bhartiya Rail Bijlee Company (BRBCL), a joint venture of NTPC and the Indian Railways, Bhel said.
Shares of state-run gas transmission and distribution firm GAIL (India) gained 3.53% after the company announced that it has started drilling the first exploratory well as operator in its NELP-IX block in Cambay Basin. GAIL (India) said that the process, technically called spudding started on 27 March 2016 in the well situated in Dugari village in Tarapur Tehsil of Anand district of Gujarat. GAIL (India) is the lead operator of the block with 25% participating interest. Other partners in this block are Bharat Petro Resources, Engineers India, Monnet Ispat Energy and Bharat Forge Infrastructure. The consortium will drill eight exploratory wells in the initial exploration phase as per minimum work commitment of production sharing contract (PSC). While this phase will continue till March 2017, acquisition, processing and interpretation (API) of 2D and 3D seismic data have already been completed, GAIL (India) said.
Index heavyweight and cigarette major ITC rose 1.69% to Rs 325.60. The stock hit a high of Rs 328.40 and low of Rs 320.50 in intraday trade.
Bank stocks edged higher after the Reserve Bank of India (RBI) after market hours yesterday, 29 March 2016, clarified some of the provisions relating to the Marginal Cost of Funds based Lending Rate (MCLR) system, which comes into effect from 1 April 2016. Among state-run banks, State Bank of India (up 4.04%), Union Bank of India (up 3.73%), Punjab National Bank (up 4.03%), Canara Bank (up 3.46%), IDBI Bank (up 1.76%), Bank of India (up 2.33%), Corporation Bank (up 3.19%), Andhra Bank (up 3.5%), Allahabad Bank (up 2.2%) and Bank of Baroda (up 3.91%) edged higher.
United Bank of India rose 0.79% to Rs 19.15. The bank said before market hours today, 30 March 2016, that it is initiating necessary steps after the Ministry of Finance conveyed that the Government of India has decided to infuse capital funds to the tune of Rs 480 crore in the bank by way of preferential allotment of equity shares in favour of the Government of India.
Vijaya Bank was up 1.46% at Rs 31.30. The bank said before market hours today, 30 March 2016, that the Board of Directors of the bank in a meeting held on 29 March 2016 accorded approval for the infusion of capital funds to the tune of Rs 220 crore by way of preferential allotment of equity shares in favour of Government of India as part of capital infusion for FY 2016. Government of India has already accorded approval for the capital infusion.
Among private sector banks, ICICI Bank (up 6.54%), IndusInd Bank (up 1.95%), Kotak Mahindra Bank (up 1.68%), Axis Bank (up 2.97%), Yes Bank (up 2.52%) and HDFC Bank (up 1.03%), edged higher.
RBI clarified that fixed-rate loans of up to three years' tenor will be priced with reference to MCLR with effect from 1 April 2016. Fixed rate loans of tenor above three years will continue to be exempted from MCLR system. As regards the effective date for applying MCLR on floating rate loans, the RBI said that MCLR prevailing on the date of first disbursement, whether partial or full, will be applicable on the floating rate loan and future reset dates determined accordingly.
For computing the marginal cost of funds, commercial banks will have the option to reckon the outstanding balances of deposits and other borrowings as on any day, not more than seven calendar days, prior to the date from which the MCLR becomes effective. The chosen time lag shall be maintained consistently for a period not less one year.
The tenor of the funds in the single largest maturity bucket, provided it is more than 30% of the entire funds, will be reckoned for determining the MCLR. In cases where a bank does not have a single time bucket with more than 30% share of the funds reckoned for MCLR, the weighted average tenor of two or more maturity buckets that together account for more than 30% will be reckoned for determining the MCLR.
Index heavyweight and housing finance major HDFC dropped after the stock turned ex-dividend for interim dividend of Rs 3 per share for the year ending 31 March 2016 (FY 2016). The stock fell 1.03% to Rs 1,116.10. The stock hit a high of Rs 1,130.10 and a low of Rs 1,111.20 so far during the day. Before turning ex-dividend, the stock offered a dividend yield of 0.26% based on the closing price of Rs 1,127.70 yesterday, 29 March 2016.
Pharmaceuticals shares edged higher. Lupin (up 5.95%), Piramal Enterprises (up 4.76%), GlaxoSmithKline Pharmaceuticals (up 2.96%), Dr Reddy's Laboratories (up 2.42%), Cipla (up 1.95%), Strides Shasun (up 1.82%), Cadila Healthcare (up 1.27%), Wockhardt (up 0.83%), Aurobindo Pharma (up 0.80%), Divi's Laboratories (up 0.53%) and IPCA Laboratories (up 0.23%), edged higher. Glenmark Pharmaceuticals (down 0.63%) and Alkem Laboratories (down 2.11%), edged lower.
Sun Pharmaceutical Industries rose 2.26% to Rs 812 after the company announced that its wholly-owned subsidiary will acquire the portfolio consisting of 14 established prescription brands from Novartis AG and Novartis Pharma AG (together Novartis) in Japan for a cash consideration of $293 million. These brands have combined annualized revenues of approximately $160 million and address medical conditions across several therapeutic areas. Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorizations to Sun Pharma's subsidiary. The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label. The local marketing partner will also be responsible for distribution of the brands. As per the December 2015 IMS data, the size of the Japanese pharmaceutical market was estimated at $73 billion, accounting for over 7% of the $1 trillion global pharmaceutical market.
Metal and mining stocks gained on renewed buying. Vedanta (up 4.16%), Hindalco Industries (up 3.67%), Hindustan Zinc (up 3.12%), Hindustan Copper (up 2.22%), National Aluminium Company (up 2.14%) edged higher.
Meanwhile, copper edged lower in the global commodities market. High Grade Copper for May 2016 delivery was currently down 0.77% at $2.197 per pound on the COMEX.
NMDC rose 0.55% to Rs 99.75. The stock turned ex-dividend today, 30 March 2016, for interim dividend of Rs 1.50 per share for the year ending 31 March 2016 (FY 2016). Before turning ex-dividend, the stock offered a dividend yield of 1.51% based on the closing price of Rs 99.20 yesterday, 29 March 2016.
Steel stocks gained on reports that the government has extended safeguard import taxes on some steel products until March 2018 to curb imports of cheap Chinese steel and shield domestic mills. Bhushan Steel (up 4.43%), Steel Authority of India (up 3.82%), JSW Steel (up 3.39%), Jindal Steel & Power (up 3.22%), edged higher. The extended import duty will apply to hot-rolled flat products of non-alloy and other alloy steel in coils of 600 mm width. It would start at 20%, minus any existing anti-dumping duty, and be lowered to 10% by March 2018 depending on the value of the goods, reports indicated. The safeguard tax will not be imposed on steel products imported at or above the floor price, reports added.
Tata Steel jumped 6.5% to Rs 323.65 after the company announced that it has decided to explore all options for portfolio restructuring including the potential divestment of its UK subsidiary Tata Steel UK, in whole or in parts. Tata Steel said that its board of directors after reviewing the recent performance of the European business of the company noted with deep concern the deteriorating financial performance of the UK subsidiary in the last twelve months. The management has advised the board of its European holding company Tata Steel Europe to explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts. Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe board will be advised to evaluate and implement the most feasible option in a time bound manner, Tata Steel said in a statement.
While global steel demand, especially in developed markets like Europe has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency. These factors are likely to continue into the future and have significantly impacted the long-term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years.
Further, the Tata Steel board also reviewed the proposed restructuring and transformation plan for Strip Products UK, prepared by the European subsidiary in consultation with an independent and internationally reputed consultancy firm. Based on the review conducted, the Tata Steel board came to a unanimous conclusion that the plan is unaffordable, requires material funding support in the next two years in addition to significant capital commitments over the long term, the assumptions behind it are inherently very risky, and its likelihood of delivery is highly uncertain. Therefore, the board concluded that it would not be able to support the investment necessary to proceed with the proposed transformation plan for strip products UK.
Tata Steel further said that the company's discussions with Greybull in relation to a sale of the UK Long Products business would continue.
Shares of HealthCare Global Enterprises (HGEL), a provider of speciality healthcare in India, slumped on its debut. The stock settled at Rs 170.95 on BSE, a discount of 21.58% compared with the initial public offer price of Rs 218. The stock debuted at Rs 209.80, a discount of 3.76% compared with its initial public offer (IPO) price. The stock hit a high of Rs 211 and a low of Rs 169 in intraday trade. On BSE, 28.86 lakh shares were traded on the counter. HGEL is a provider of speciality healthcare in India, focused on cancer and fertility.
The Sensex and the Nifty snapped a two-day losing streak. The Sensex had lost 437.10 points or 1.72% in the preceding two trading sessions to settle at 24,900.46 yesterday, 29 March 2016, from its close of 25,337.56 on 23 March 2016. The Sensex has risen 2336.58 points or 10.15% in this month so far (till 30 March 2016). The Sensex has fallen 778.96 points or 2.98% in calendar year 2016 so far (till 30 March 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 2843.97 points or 12.64%. The Sensex is off 3756.03 points or 12.9% from a 52-week high of 29,094.61 hit on 15 April 2015. The Sensex is off 4686.16 points or 15.6% from a record high of 30,024.74 hit on 4 March 2015.
Meanwhile, in the government securities (GSec) market, bond prices rose after the Reserve Bank of India (RBI) increased the limits for investment by foreign portfolio investors (FPI) in both Central Government Securities and State Development Loans (SDL) for the half year ending September 2016 in two tranches. The yield on 10-year benchmark federal paper 7.59% GS 2026 was currently hovering at 7.4955%, lower than 7.5144% at close in the previous trading session. Bond yields and prices are inversely related.
As per the Medium Term Framework (MTF) announced in October 2015, the limit for investment by FPIs in Central Government Securities for the half year ending September 2016 will be increased in two tranches, i.e., by Rs 10500 crore from 4 April 2016 and by Rs 10000 crore from 5 July 2016. The limit for SDL will be raised in two tranches of Rs 3500 crore each from 4 April 2016 and 5 July 2016.
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