A bout of volatility was witnessed as key benchmark indices trimmed gains after extending initial gains in morning trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty trimmed gains after both these key benchmark indices hit their highest levels in almost four weeks. The market breadth indicating the overall health of the market was quite strong, with more than two gainers against every loser on BSE. The Sensex was currently up 207.88 points or 0.75% at 27,853.41.
Metal shares were trading higher. Tata Steel slipped ahead of Q4 earnings. Shares of pharmaceuticals companies were in demand.
The gains for key benchmark indices materialised as Brent crude oil prices dropped overnight. The decline in global crude oil prices augur well for India as the country imports about 80% of its crude oil requirements. Comments by Reserve Bank of India (RBI) Governor Raghuram Rajan that inflation has come down tremendously in India also aided the upmove on the domestic bourses.
Meanwhile, the finance ministry yesterday, 19 May 2015, reportedly issued draft guidelines on gold monetization scheme that will encourage Indians to vest the gold in their possession with banks and earn interest on it.
Foreign portfolio investors bought shares worth a net Rs 48.06 crore yesterday, 19 May 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 451.02 crore yesterday, 19 May 2015, as per provisional data released by the stock exchanges.
In the overseas markets, Asian indices were mixed. In US, stocks lost steam by the end of session and closed mostly lower yesterday, 19 May 2015, though Dow industrials eked out a small gain to finish at a fresh record.
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At 10:16 IST, the S&P BSE Sensex was up 207.88 points or 0.75% at 27,853.41. The index jumped 257.48 points at the day's high of 27,903.01 in morning trade, its highest level since 23 April 2015. The index gained 98.46 points at the day's low of 27,743.99 at the onset of trading session.
The Nifty was up 58.30 points or 0.70% at 8,423.95. The index hit a high of 8,440.35 in intraday trade, its highest level since 23 April 2015. The index hit a low of 8,391.45 in intraday trade.
The BSE Mid-Cap index was 42.40 points or 0.4% at 10,693.42. The BSE Small-Cap index was up 64.93 points or 0.58% at 11,252.66. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was quite strong, with more than two gainers against every loser on BSE. 1,263 shares rose and 598 shares fell. A total of 88 shares were unchanged.
Metal shares were trading higher. Bhushan Steel (up 0.82%), Steel Authority of India (up 0.37%), Jindal Steel & Power (up 0.33%), Vedanta (up 0.33%), Hindustan Copper (up 0.32%), National Aluminum Company (up 0.30%), JSW Steel (up 0.16%) and NMDC (up 0.15%), edged higher. Hindalco Industries (down 0.86%) and Hindustan Zinc (down 1.1%), edged lower.
Tata Steel was down 1.06% to Rs 364.25 ahead of its Q4 result announcement today, 20 May 2015. Shares of Electrosteel Steels were up 8.82% at Rs 4.32. With respect to news article titled "Tata Steel in advance talk to buy ELECTROSTEEL STEELS", Tata Steel clarified during trading hours today, 20 May 2015, that it is a large Indian multi-national steel manufacturing company having operations in 26 countries and commercial presence in over 50 countries. The company is the world's second most geographically diversified steel producer with about 80,000 employees spread across five continents. Tata Steel, as part of its business strategy, regularly evaluates organic and inorganic growth opportunities across various segments of its operations. The board and management of Tata Steel is committed to making disclosures at the appropriate time so as to eliminate any asymmetry of information. The company has robust disclosure principles and follows a policy of not commenting on market speculation. Currently, there has been no event that requires a disclosure under Clause 36 of the listing agreement, the company said in a statement.
Shares of pharmaceuticals companies were in demand. Wockhardt (up 2.68%), Strides Arcolab (up 1.52%), Aurobindo Pharma (up 1.25%), Dr. Reddy's Laboratories (up 1.03%), Cadila Healthcare (up 0.87%), Cipla (up 0.82%), Sun Pharmaceutical Industries (up 0.38%), Lupin (up 0.27%), IPCA Laboratories (up 0.16%) and Piramal Enterprises (up 0.01%), edged higher. GlaxoSmithKline Pharmaceuticals (down 0.09%) and Divi's Laboratories (down 1.8%), edged lower.
Glenmark Pharmaceuticals rose 1.75% after the Reserve Bank of India (RBI) after trading hours yesterday, 19 May 2015, notified increase the limit for the purchase of equity shares of the company by foreign institutional investors (FIIs) under the portfolio investment scheme to 49% of the company's paid up capital from earlier 40%. The total FII holding in Glenmark Pharmaceuticals stood at 34.71% as per the shareholding pattern as on 31 March 2015.
In the global commodities market, Brent crude oil prices dropped overnight. Brent for July settlement was up 62 cents at $64.64 a barrel. The contract had lost $2.25 a barrel or 3.39% to settle at $64.02 a barrel during the previous trading session. The decline in global crude oil prices and deregulation of diesel price announced by the Indian government in October 2014 will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. The slide in global crude oil prices will also help India in containing its current account deficit and fuel price inflation. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. India imports 80% of its crude oil requirement.
In the foreign exchange market the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 63.7225, compared with its close of 63.68 during the previous trading session.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said in New York yesterday, 19 May 2015, that inflation has come down tremendously in India. Rajan also reportedly called the government's spending cuts significant. Rajan said that the depreciation of the rupee is due in part to the US dollar's strength and it has fallen less, and in a less volatile fashion, than other currencies. While the rupee has slid against the strengthening dollar, he said that it has actually strengthened against other currencies.
Meanwhile, the finance ministry yesterday, 19 May 2015, reportedly issued draft guidelines on gold monetization scheme that will encourage Indians to vest the gold in their possession with banks and earn interest on it. Banks could treat gold deposits as part of their cash reserve ratio (CRR) or statutory liquidity ratio (SLR), the finance ministry said in its guidelines released to seek opinions about its gold monetisation scheme. The SLR is the minimum amount of bonds that banks must have, while the CRR is the share of deposits they have to compulsory keep with the central bank. Under the scheme, customers' will have to deposit gold for at least a year and banks may pay the interest after 30 or 60 days of the opening of the gold savings account, the proposal said. Both the interest and the principal payable to depositors are likely to be valued in gold and the gains will be tax-free.
The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams so that even small depositors are encouraged. The government has sought feedback on the scheme by 2 June 2015.
In overseas markets, Asian indices were mixed today, 20 May 2015. Key benchmark indices in China, Indonesia, Japan and South Korea were up by 0.51% to 1.33%. Key benchmark indices in Taiwan, Singapore and Hong Kong were off 0.2% to 0.34%.
In US, stocks lost steam by the end of session and closed mostly lower yesterday, 19 May 2015, though Dow industrials eked out a small gain to finish at a fresh record. Falling oil prices weighed on energy stocks, with the sector selling off sharply. Meanwhile, investors digested a report showing a sharp increase in housing starts last month, pondering the effect it might have in determining the course of the Federal Reserve's interest rate policy.
Investors will get a closer look at the US Federal Reserve's thoughts about interest rates and economic data when the minutes of the Federal Open Market Committee meeting from its meeting held in late April 2015 are released in the global day today, 20 May 2015.
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