Auto, banking sector stocks and index heavyweights HDFC, L&T and Reliance Industries (RIL) led gains as key benchmark indices surged in mid-afternoon trade. At 14:17 IST, the barometer index, the S&P BSE Sensex, was up 477.04 points or 1.82% at 26,697.99. The 50-unit CNX Nifty was up 141.20 points or 1.78% at 8,092.45. The Nifty retained the psychological 8,000 level after crossing that level in opening trade. 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 lackluster US jobs data for September 2015. The Sensex surged 498.17 points or 1.9% at the day's high of 26,719.34 in mid-afternoon trade, a six-week high. The Nifty hit its highest level in more than six weeks when it jumped 146.70 points or 1.84% at the day's high of 8,097.60 in mid-afternoon trade.
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.
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.
Closer home, broad market depicted strength. There were more than two gainers against every loser on BSE. 1,893 shares rose and 759 shares declined. A total of 104 shares were unchanged. The BSE Mid-Cap index was up 1.5%. The BSE Small-Cap index was up 1.49%. Both these indices underperformed the Sensex.
Cement stocks gained. Shree Cement (up 4.12%), ACC (up 0.82%), Ambuja Cements (up 0.02%), and UltraTech Cement (up 1.58%), gained.
Grasim Industries advanced 2.09%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
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Most IT stocks advanced. Tech Mahindra (up 1.14%), Oracle Financial Services Software (up 1.11%), MphasiS (up 0.04%), TCS (up 2.57%), and Wipro (up 0.17%) edged higher. HCL Technologies (down 0.54%) and Infosys (down 0.11%) declined.
Navin Fluorine International (NFIL) jumped 4.5% after the company said that it has acquired the entire remaining 49% stake in Manchester Organics (MOL), UK pursuant to the agreements executed at the time of acquisition of initial 51% equity stake and based on mutual negotiations. UK based MOL is engaged in specialized chemical research. The acquisition will enable NFIL to undertake more complex activities relating to fluorination and add more value to NFIL's specialty fluorochemicals portfolio. NFIL (UK), a 100% subsidiary of NFIL has acquired the balance 49% equity in MOL at an aggregate price of 6.30 million pounds (out of which 5.6 million pounds was paid upfront and the balance will be paid in a deferred manner on fulfillment of certain conditions), NFIL said in a statement.
Educomp Solutions galloped 13.7% after the company said that its subsidiary, Educomp Intelliprop Ventures, sold its entire stake in Wiz Learn Technology, Singapore to V-cube Global Services. The announcement was made during trading hours today, 5 October 2015. According to Educomp Solutions, this sale will yield a return of 57% on original investment. The company said proceeds from the transaction will be used in repaying existing debt to Axis Bank.
Corporation Bank gained 0.92%. 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.
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