Frontline stocks led rally on the domestic bourses as a disappointing US jobs report triggered speculation that the US Federal Reserve won't lift interest rates until 2016. The barometer index, the S&P BSE Sensex, surged 564.60 points or 2.15% to settle at 26,785.55. The 50-unit CNX Nifty jumped 168.40 points or 2.12% to settle at 8,119.30. The Nifty surged past the psychological 8,000 level. The Sensex and the Nifty, both, attained their highest level in more than six weeks. Oil, metal, auto, banking sector stocks and index heavyweights HDFC, L&T and Reliance Industries (RIL) led rally for key benchmark indices which remained in positive zone throughout the trading session.
The market sentiment was upbeat as a number of commercial banks have announced a reduction in their base rate during the past few days in the wake of a steeper-than-expected 50 basis points cut in the repo rate announced by the Reserve Bank of India (RBI) after a regular monetary policy review early last week. The base rate is the minimum lending rate charged by a bank. Banks add their spread to the base rate in pricing loans to customers. The reduction in the base rate will bring down interest costs on working capital loans in the coming months.
The rally on the domestic bourses was a part of the rally in global stocks triggered by expectations that the US Federal Reserve will delay the first interest rate hike in almost a decade in the wake of a weak US jobs data for September 2015.
The Sensex surged 564.60 points or 2.15% to settle at 26,785.55, its highest closing level since 21 August 2015. The Sensex surged 601.47 points or 2.29% at the day's high of 26,822.42 in late trade. The Sensex rose 154.36 points or 0.58% at the day's low of 26,375.31 hit at onset of the trading session.
The 50-unit CNX Nifty jumped 168.40 points or 2.12% to settle at 8,119.30, its highest closing level since 21 August 2015. The Nifty jumped 178 points or 2.23% at the day's high of 8,128.90 in late trade. The Nifty rose 54.20 points or 0.68% at the day's low of 8,005.10 at onset of the trading session.
The rally on the bourses was broad based. More than two stocks rose against each stock that fell on BSE. 2,001 shares rose and 792 shares declined. A total of 99 shares were unchanged. The BSE Mid-Cap index rose 1.79%. The BSE Small-Cap index rose 1.62%. Both these indices underperformed the Sensex.
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The total turnover on BSE amounted to Rs 3027 crore, higher than turnover of Rs 2937.39 crore registered during the previous trading session.
All the twelve sectoral indices on BSE edged higher. The S&P BSE Capital Goods index (up 3.28%), the S&P BSE Bankex (up 2.8%), the S&P BSE Metal index (up 2.49%), the S&P BSE Power index (up 2.31%) outperformed the Sensex. The S&P BSE Healthcare index (up 0.5%), the S&P BSE FMCG index (up 0.78%), the S&P BSE Realty index (up 1.14%), the S&P BSE IT index (up 1.28%), the S&P BSE Teck index (up 1.37%), the S&P BSE Oil & Gas index (up 1.75%), the S&P BSE Consumer Durables index (up 1.92%) and the S&P BSE Auto index (up 2.12%) underperformed the Sensex.
Shares of oil exploration and production (E&P) companies edged higher as crude oil prices extended previous trading session's gains. Cairn India (up 1.96%), ONGC (up 3.01%) and Oil India (up 1.94%) edged higher. Higher crude oil prices will increase realization from crude sales for oil exploration firms.
Index heavyweight Reliance Industries (RIL) gained 2.98% to Rs 888. The stock hit high of Rs 888.80 and low of Rs 862.50.
In the global commodities markets, Brent crude oil futures edged higher. Brent for November settlement was currently up 61 cents at $48.74 a barrel. The contract had risen 44 cents or 0.92% to settle at $48.13 a barrel during the previous trading session.
Index heavyweight and engineering and construction major L&T advanced 4.28% to Rs 1,553. The stock hit high of Rs 1,554 and low of Rs 1,505.
Bank stocks edged higher on renewed buying. Among public sector banks, UCO Bank (up 3.93%), Syndicate Bank (up 6.12%), Punjab National Bank (up 2.83%), Allahabad Bank (up 2.33%), Bank of Baroda (up 3.09%), State Bank of India (SBI) (up 2%), Canara Bank (up 3.95%), and Bank of India (up 3.72%) edged higher.
Corporation Bank gained 1.15%. The bank said during market hours today, 5 October 2015, that it has reduced the base rate for lending by 20 basis points from 9.9% per annum (p.a.) to 9.7% p.a. with effect from 8 October 2015. The base rate is the minimum lending rate charged by a bank.
United Bank of India gained 1.83%. The bank on Saturday, 3 October 2015, said it has decided to reduce its base rate by 25 basis points to 9.65% from 9.9% with effect from 5 October 2015. The bank has also reduced interest rate on domestic term deposits under various maturity buckets by 25 to 50 basis points.
Union Bank of India rose 5.03% after the bank announced that its board on 26 August 2015 approved purchase of 49% stake in Union KBC Asset Management and Union KBC Trustee Company from KBC Participations Renta. Union KBC Asset Management and Union KBC Trustee Company operate the mutual funds businesses. KBC Participations Renta is a group company of Luxembourg-based KBC Asset Management NV. The announcement was made during trading hours today, 5 October 2015.
Union Bank of India and KBC Asset Management NV had formed two joint ventures - Union KBC Asset Management Company and Union KBC Trustee Company - in 2009 with 51% and 49% holding, respectively. After this acquisition, both Union KBC Asset Management and Union KBC Trustee Company will become wholly-owned subsidiaries of Union Bank of India.
In a separate announcement on Saturday, 3 October 2015, Union Bank of India said that consequent to the receipt of capital funds from Government of India (GoI) to the tune of Rs 1079.99 crore, the bank on 30 September 2015 allotted 5.16 crore equity shares of Rs 10 each for cash at an issue price of Rs 209.05 per equity share on preferential basis to the GoI.
Among private sector banks, Axis Bank (up 3.37%), HDFC Bank (up 2.52%), Kotak Mahindra Bank (up 1.84%) Yes Bank (up 3.12%) and IndusInd Bank (up 0.07%) edged higher. Federal Bank dropped 0.15%.
ICICI Bank rose 4.96% after the bank announced a reduction of 35 basis points in its base rate to 9.35% per annum from 9.7% with effect from 5 October 2015. The base rate is the minimum lending rate charged by a bank.
Tech Mahindra rose 0.91%. Tech Mahindra after market hours today, 5 October 2015, announced bagging a contract to provide digital solutions to Bombardier. As per the agreement with Bombardier Commercial Aircraft, Tech Mahindra will develop the Aircraft Ground Support System (AGSS) for Bombardier's Aircraft Health Management System (AHMS) for the C Series family of aircraft. The AGSS will facilitate real-time and post-flight recorded data management, fault notification and diagnostic reporting, Tech Mahindra and Bombardier said in a joint press release.
HDFC gained 4.64%. The company said on Saturday, 3 October 2015, that the board of directors has accorded approval to issue of 3.65 crore warrants to the qualified institutional buyers (QIBs) at an issue price of Rs 14 per warrant. Each warrant is exchangeable with one equity share of the company at a warrant exercise price of Rs 1,475 per share. The issue price of Rs 14 per warrant is neither adjustable with the warrant exercise price nor refundable by the company. The issue of warrants is attached to the issue of non convertible debentures (NCDs) aggregating Rs 5000 crore to the QIBs. The NCDs carry a coupon of 1.43% and due for maturity in March 2017.
HDFC also announced that the company's profit on sale of investments fell 53.39% to Rs 48 crore in Q2 September 2015 over Q2 September 2014. Income from dividend jumped 308.65% to Rs 425 crore in Q2 September 2015 over Q2 September 2014. The company under the loan assignment route sold loans amounting to Rs 2864 crore to HDFC Bank in Q2 September 2015, which was much higher than the figure of Rs 844 crore in Q2 September 2014.
Auto stocks gained. Mahindra & Mahindra (M&M) (up 2.04%), Ashok Leyland (up 0.53%), Hero MotoCorp (up 4%), Eicher Motors (up 2.62%) gained. TVS Motor Company (down 0.26%) declined.
Tata Motors surged 6.09% to Rs 315.10 on bargain hunting after the stock fell 16.16% in the preceding 13 trading sessions to Rs 297 on Thursday, 1 October 2015, from a recent high of Rs 354.25 on 10 September 2015. Meanwhile, the company announced after market hours on Thursday, 1 October 2015, that its total sales fell by 2% to 45,215 units in September 2015 over September 2014. The company's sales from exports declined 16% to 4,402 units in September 2015 over September 2014.
This monthly sales data pertains to the standalone operations of Tata Motors. Tata Motors' standalone business mainly comprises of its commercial vehicles and passenger vehicles business in India.
Bajaj Auto gained 2.78%. The company said during market hours today, 5 October 2015, that its total sales dropped 4% to 3.84 lakh units in September 2015 over September 2014. Motorcycles sales declined 5% to 3.3 lakh units in September 2015 over September 2014. Commercial vehicles sales rose 3% to 54,172 units in September 2015 over September 2014. Exports declined 0.23% to 1.73 lakh units in September 2015 over September 2014.
Maruti Suzuki India (MSIL) lost 3.44% on market buzz that a foreign investment bank has downgraded the stock to underperform from buy citing an expensive valuation.
Metal and mining stocks gained on expectations Beijing will take steps to accelerate growth. Tata Steel (up 6.25%), Steel Authority of India (Sail) (up 2.27%), Vedanta (up 1.08%), JSW Steel (up 4.51%), National Aluminium Company (up 1%), Jindal Steel & Power (up 16.89%), Hindustan Zinc (up 2.16%), Hindalco Industries (up 4.67%), NMDC (up %) and Hindustan Copper (up %) edged higher. China is the world's largest consumer of steel, copper and aluminum.
A downgrade from the World Bank for China helped fueled some stimulus hopes for that country. According to a latest report from the World Bank, China's economy is expected to grow at about 7% in 2015 and the growth will gradually moderate thereafter as its economy continues to shift toward a model more dominated by domestic consumption and services.
Uttam Galva Steels rose by maximum permissible limit for the day of 20% to Rs 39.80 after a large bulk deal of 1.07 crore shares was executed at Rs 33.70 per share at the onset of the trading session on BSE. On BSE, 1.11 crore shares were traded in the counter as against average daily volume of 69,020 shares in the past one quarter.
Key benchmark indices edged higher for the fourth consecutive session. The Sensex has garnered 1168.71 points or 4.56% in the preceding four trading sessions from its close of 25,616.84 on 28 September 2015. The Sensex has risen 630.72 points or 2.41% in this month so far (till 5 October 2015). The Sensex has fallen 713.87 points or 2.59% in this calendar year so far (till 5 October 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 1,952.01 points or 7.86%. The Sensex is off 3,239.19 points or 10.78% from a record high of 30,024.74 hit on 4 March 2015.
In overseas stock markets, European stocks surged as weak US employment data fueled speculation the US Federal Reserve won't increase interest rates this year. Asian stocks edged higher on expectations Beijing will take steps to accelerate growth and as prospects of a near-term interest rate hike by the Federal Reserve ebbed in the wake of last week's weaker-than-expected US employment data for September 2015. The possibility of the Fed delaying the lift-off date for rates also meant its loose policy, which has helped shore up risk assets globally by providing cheap cash, would continue a little longer. The US central bank has kept interest rates near zero since the end of 2008 in an effort to stoke economic growth in the aftermath of the global financial crisis. US stocks closed on a positive note during the previous trading session on Friday, 2 October 2015, thanks to a late-afternoon rally, but a weak US jobs report added to worries that the economy is slowing.
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