After languishing in positive zone near the flat line in morning trade, key benchmark indices extended gains in mid-morning trade after the outcome of a survey showed that the upturn in the Indian manufacturing sector gathered pace in May 2015, with levels of production and new orders rising at the fastest rates since January 2015. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their highest levels in more than a week.The market breadth indicating the overall health of the market was positive. The Sensex was currently up 103.49 points or 0.37% at 27,931.93.
Maruti Suzuki India rose after reporting decent growth in vehicle sales in May 2015. Capital goods shares were mostly higher. Larsen & Toubro edged higher after the company said its construction arm won orders worth Rs 1099 crore across various business segments in May 2015. Power generation stocks were mixed.
Meanwhile, data released by India's statistics office after trading hours on Friday, 29 May 2015, showed that the Indian economy grew 7.5% in Q4 March 2015, which was much higher than revised GDP growth of 6.6% in Q3 December 2014. Meanwhile, the Union Cabinet on Saturday, 30 May 2015, gave its approval to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2015.
Foreign portfolio investors bought shares worth a net Rs 2284.30 crore during the previous trading session on Friday, 29 May 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 2267.88 crore on Friday, 29 May 2015, as per provisional data released by the stock exchanges.
In overseas markets, stocks in mainland China surged after China's official purchasing managers index showed modest gains in May 2015. US stocks edged lower during the previous trading session on Friday, 29 May 2015, after a string of weak economic reports.
At 11:16 IST, the S&P BSE Sensex was up 103.49 points or 0.37% at 27,931.93. The index rose 105.46 points at the day's high of 27,933.90 in mid-morning trade, its highest level since 22 May 2015. The index fell 90.86 points at the day's low of 27,737.58 at the onset of trading session.
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The CNX Nifty was up 22.90 points or 0.27% at 8,456.55. The index hit a high of 8,460.05 in intraday trade, its highest level since 22 May 2015. The index hit a low of 8,405.40 in intraday trade.
The BSE Mid-Cap index was up 31.22 points or 0.29% at 10,747.31. The BSE Small-Cap index was up 31.36 points or 0.28% at 11,311.93. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,174 shares rose and 1,060 shares fell. A total of 97 shares were unchanged.
Maruti Suzuki India rose after reporting decent growth in vehicle sales in May 2015. The stock was up 1.1% at Rs 3,827. Maruti's total sales rose 13.8% to 1.14 lakh units in May 2015 over May 2014. Domestic sales rose 13% to 1.02 lakh units in May 2015 over May 2014. Total exports rose 20.3% to 12,466 units in May 2015 over May 2014.
Power generation stocks were mixed. Adani Power (down 1.22%), CESC (down 1.01%), GMR Infrastructure (down 0.77%), Jaiprakash Power Ventures (down 0.71%), JSW Energy (down 0.31%), NHPC (down 0.27%) and NTPC (down 0.07%) edged lower. Reliance Infrastructure (up 0.33%), Reliance Power (up 0.37%), Tata Power (up 0.57%) and Torrent Power (up 0.74%) edged higher.
Minister of State (Independent Charge) for Power, Coal, New and Renewable Energy, Piyush Goyal on Saturday, 30 May 2015, said that because of transparent processes and government efforts there is no shortage of coal in power plants in the country. Goyal made this comments while interacting with the people of India through social media on Saturday, 30 May 2015, on the completion of one year of the NDA government. Goyal further suggested that state governments needed to cooperate with central government to achieve the central government's aim of Affordable Power for all by 2019. He also emphasised that the government has succeeded in bringing down the prices of LED lights from Rs 310 to Rs 81.93. Speaking on the steps to contain carbon emissions, Goyal said that the government plans to phase out thermal power plants older than 25 years with the Ultra Super Critical power plants, which would have lesser carbon emissions.
Separately, the Ministry of New and Renewable Energy today, 1 June 2015, said that a Supreme Court order dated 13 May 2015 in the case between the Hindustan Zinc vs Rajasthan Electricity Regulatory Commission on the applicability of Renewable Purchase Obligation (RPO) regulations has ruled that RPO on captive consumer is justified and interpreted it in the context of Article 51A (g) of the Constitution of India that cast a fundamental duty on the citizen to protect and improve the natural environment, and the mandate of Article 21 that guarantee right to live with healthy life. The Ministry of New and Renewable Energy that the Supreme Court order on RPO is a positive development and will help in enhancing RPO compliance and further contribute to renewable energy growth in the country.
Shares of Hindustan Zinc were off 0.59% at Rs 168.10.
Power Grid Corporation of India was off 0.59% at Rs 142.85. With respect to news titled "RINL power grid ink pact to form JV company", Power Grid Corporation of India clarified during trading hours today, 1 June 2015, that vide its letter dated 19 September 2014, the company had informed the stock exchanges that the company's board at its meeting held on 17 September 2014 had accorded approval for formation of a joint venture company between Power Grid Corporation of India and Rashtriya Ispat Nigam (RINL) on 50:50 equity participation basis for setting up manufacturing facility for transmission line towers and tower parts at Vishakhapatnam. Further to that Power Grid Corporation of India on 27 May 2015 signed the Share Holders Agreement (SHA) with RINL for the said purpose, the company added.
Power Grid Corporation of India's net profit rose 20.13% to Rs 1412.48 crore on 18.51% rise in net sales to Rs 4662.19 crore in Q4 March 2015 over Q4 March 2014. The result was announced on Saturday, 30 May 2015.
Capital goods shares were mostly higher. BEML (up 5.64%), Alstom T&D India (up 3.13%), Praj Industries (up 2.06%), Thermax (up 1.75%), Crompton Greaves (up 1.62%), Bharat Heavy Electricals (up 1.31%), Punj Lloyd (up 1.21%), Bharat Electronics (up 0.85%), Havells India (up 0.65%), Lakshmi Machine Works (up 0.30%), ABB India (up 0.17%) and AIA Engineering (up 0.11%) edged higher.
ALSTOM India (down 0.06%), Pipavav Defence and Offshore Engineering Company (down 0.08%), Siemens (down 0.23%), Jindal Saw (down 1.06%) and SKF India (down 1.35%) edged lower.
Larsen & Toubro (L&T) was up 0.68% at Rs 1,666.65. The stock hit a high of Rs 1,675 and a low of Rs 1,642.10 so far during the day. L&T announced during trading hours today, 1 June 2015, that its construction arm won orders worth Rs 1099 crore across various business segments in May 2015.
On a consolidated basis, L&T's net profit fell 27.11% to Rs 2070 crore in Q4 March 2015 on the higher base net profit of Rs 2840 crore in Q4 March 2014, which included a one-time write back. The consolidated gross revenue rose 3.8% to Rs 28275 crore in Q4 March 2015 over Q4 March 2014, registering a modest growth as certain sectoral constraints slowed down the pace of execution. L&T announced its Q4 results on Saturday, 30 May 2015.
On a consolidated basis, L&T's net profit fell 2.79% to Rs 4765 crore in the year ended March 2015 over the year ended March 2014, mainly due to challenges faced during execution of international projects in the hydrocarbon sector. Infrastructure and services businesses of the group, however, recorded healthy increase in bottom line, thereby limiting year decline in overall net profit for the year at 2.8%. Moreover, net profit of the previous year included a one-time write back of Rs 664 crore on account of amortization charge of toll road projects. Neutralizing this high base effect, the net profit for the year ended March 2015 shows an increase, L&T said.
L&T said it was successful in garnering fresh orders worth Rs 155367 crore at consolidated level during the year ended March 2015, recording an impressive y-o-y growth of 22%. The order inflow growth was driven by domestic orders across businesses. The international orders during the year at Rs 39116 crore constituted lower share at 25% of the order inflow, as the company was selective in pursuing international opportunities. The company said that 55% of the total order inflow during the year was secured by the infrastructure segment.
The order intake for Q4 March 2015 was also higher at Rs 47582 crore, recording a y-o-y growth of 39%. International order inflow during the quarter was at Rs 11364 crore and constituted 24% of the order inflow for the quarter.
Consolidated order book of the group stood at Rs 232649 crore as at 31 March 2015, higher by 28% on a y-o-y basis. International order book constituted 26% of the total order book.
With regard to future business outlook, L&T said that the company is well placed to benefit early as sustainable growth opportunities emerge over the next few years. The government's focus on infrastructure development, manufacturing of defence equipment, fast tracking power and mining sector reforms and providing thrust to 'Make in India' programme are positive indicators for the company, L&T said.
Meanwhile, the outcome of a survey showed that the upturn in the Indian manufacturing sector gathered pace in May 2015, with levels of production and new orders rising at the fastest rates since January 2015. The seasonally adjusted HSBC India Purchasing Managers' Index hit a four-month high of 52.6 in May 2015, from 51.3 in April 2015, Markit Economics said today, 1 June 2015. The sharpest rise was reported by consumer goods producers. Solid increases were also seen in capital and intermediate goods production. Underpinning higher output was improved demand from the domestic and foreign markets. Meanwhile, a further increase in input costs was seen and, consequently, charges were raised following a decline seen in the preceding month.
The outlook for the manufacturing sector is, however, clouded by a stagnant jobs market as firms remain uncertain about the sustainability of the upturn, said Pollyanna De Lima, Economist at Markit Economics. Over 99% of panellists reported unchanged staffing levels in May 2015, citing uncertainty about the sustainability of growth, Markit Economics said.
Meanwhile, data released by India's statistics office after trading hours on Friday, 29 May 2015, showed that the Indian economy grew 7.5% in Q4 March 2015, which was much higher than revised GDP growth of 6.6% in Q3 December 2014. The GDP growth for Q3 December 2014 was revised downwards to 6.6% compared with 7.5% growth reported earlier. The Indian economy expanded by 7.3% (provisionally) in the year ended 31 March 2015, higher than expansion of 6.9% in the year ended 31 March 2014.
Meanwhile, the Union Cabinet on Saturday, 30 May 2015, gave its approval to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2015. Changes in the provisions of the 2013 land acquisition Act will facilitate farmers to get better compensation and rehabilitation and resettlement benefits in lieu of land compulsorily acquired by the appropriate Government, according to a government statement. The government first issued the Ordinance in December which was re-promulgated in April. It was observed that some provisions of the 2013 land acquisition Act were making the implementation of the Act difficult and this made it necessary to bring changes in the Act, while safeguarding the interest of farmers and affected families in cases of land acquisition, according to the government statement. In addition, procedural difficulties in the acquisition of lands required for important national projects required to be mitigated. In order to remove them, certain amendments were made in the Act while further strengthening the provisions to protect the interests of the 'affected families'. In view of the urgency, these were brought about by an Ordinance on 31 December 2014. Subsequently, on 10 March 2015, the Lok Sabha passed the Amendment Bill to replace the Ordinance. The Amendment Bill passed by the Lok Sabha includes some further changes to the Ordinance. However, the Bill could not be taken up for consideration in the Rajya Sabha as the Rajya Sabha was adjourned on 20 March 2015.
Meanwhile, economists expect the Reserve Bank of India (RBI) to cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review tomorrow, 2 June 2015. Economists expect rate cut from the central bank in an attempt to aid economic recovery in India. The RBI is scheduled to announce the outcome of its second bi-monthly monetary policy review for the year 2015-16 at 11:00 IST tomorrow, 2 June 2015.
In overseas markets, Asian shares edged lower today, 1 June 2015. Key indices in Taiwan, South Korea, Indonesia and Japan were down by 0.02% to 0.72%. Key indices in China and Hong Kong were up 0.94% to 2.83%.
China's manufacturing activity continued to deteriorate in May despite government measures to support the economy, a closely watched survey showed Monday. The HSBC China Manufacturing Purchasing Managers Index rose to a final reading of 49.2 in May from 48.9 in April, but the result was in negative territory for the third month in a row. Anything below the 50 mark indicates contraction.
China's official manufacturing purchasing managers index rose to 50.2 in May from 50.1 a month ago, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement. The subindex measuring new orders climbed to 50.6 from 50.2 in April, while the production subindex improved to 52.9 from 52.6, the statement said.
China's official nonmanufacturing PMI, also released on Monday, fell to 53.2 from 53.4 in April.
Japanese capital investment rose 5.8% from the previous quarter in the January-March period, the finance ministry said Monday, as Prime Minister Shinzo Abe pushes businesses to do their part in revitalizing the economy. Capital investment was up 7.3% compared with where it stood a year earlier, the finance ministry said, the fastest on-year growth in four quarters.
US stocks edged lower during the previous trading session on Friday, 29 May 2015, after a string of weak economic reports. The government reported on Friday that the economy contracted 0.7% in the first quarter. That was worse than its initial estimate of growth of 0.2%.
Also weighing on stocks was a decline in the Chicago Business Barometer, commonly known as the Chicago PMI, a survey of Chicago-area purchasing managers that provides insight into companies' business plans. The Chicago PMI shrank to 46.2 this month from 52.3 in the prior one. By moving below the 50-point threshold, the indicator signals that the economy shrank for the region.
Separately Friday, a reading on consumer sentiment showed US consumer optimism in May was higher than expected but still down sharply from the end-of-April reading. The University of Michigan final May sentiment index came in at 90.7, up from the unexpectedly weak preliminary reading of 88.6. Both May numbers are down sharply from the end-April reading of 95.9. The index reached an 11-year high of 98.1 in January.
In Europe, developments on Greece are being closely watched. Greece is scheduled to repay euro 1.6 billion ($1.76 billion) to the International Monetary Fund (IMF) between June 5-19.
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