Key benchmark indices registered modest gains after the minutes of the latest US Federal Reserve meeting indicated that a rate hike from the Fed was unlikely at the Fed's September policy meeting. The barometer index, the S&P BSE Sensex, rose 100.80 points or 0.36% at 28,106.17, as per the provisional closing data. The gains for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty rose 49.20 points or 0.57% to 8,673.25, as per the provisional closing data. A delay in interest rate increases from the Fed would slow capital flight from emerging markets. The Sensex and the Nifty snapped a two-day losing streak.
The Sensex rose 208.80 points, or 0.75% at the day's high of 28,214.17 in mid-morning trade, its highest level since 9 August 2016. The index rose 71.63 points, or 0.26% at the day's low of 28,077 in early trade. The Nifty rose 66.65 points, or 0.77% at the day's high of 8,690.70 in mid-morning trade, its highest level since 9 August 2016. The index rose 21 points, or 0.24% at the day's low of 8,645.05 in early trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,658 shares rose and 1,030 shares fell. A total of 178 shares were unchanged. The BSE Mid-Cap index provisionally rose 0.43%. The BSE Small-Cap index provisionally rose 1.01%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3114 crore, higher than turnover of Rs 2848.97 crore registered during the previous trading session.
In overseas stock markets, European shares edged higher led by gains in financials and industrial stocks. Asian stocks were mixed after minutes of the US Federal Reserve's latest meeting showed several members were cautious on hiking interest rates soon. US stocks closed slightly higher yesterday, 17 August 2016, sharply paring earlier losses, as minutes from the Federal Reserve's July meeting showed policy makers remain divided on prospects for a near-term rate increase. Stocks bounced off session lows after St. Louis Federal Reserve President James Bullard said that with US growth trending below 2%, interest rates can stay low.
Reliance Industries (RIL) rose 0.19% at Rs 1,015.95 after the company issued a clarification with reference to news item suggesting that the oil ministry slapped $250 million profit petroleum penalty on RIL. The company clarified during market hours today, 18 August 2016, that the issue is an ongoing dispute on disallowance of cost recovery by the Ministry of Petroleum and Natural Gas (MoPNG). The dispute started in 2011 and is currently under arbitration in accordance with provisions of the Production Sharing Contract (PSC). The parties to arbitration are Contractor Group (RIL, BP and NIKO) and Government of India (through MoPNG).
Every year, based on its own interpretations of the PSC and assumptions (with which the Contractor Group does not agree), MoPNG revises the total cost it proposes to disallow and consequently aggregates the figure with the figures of the previous years. It also demands additional profit petroleum (in total including previous year claims as well) as GoI share.
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Upto financial year 2013-2014, the cost recovery proposed to be disallowed was $2.376 billion and consequent demand of Government of India (GoI) share of additional profit petroleum of $195.3 million on cumulative basis. On 3 June 2016, the company received a revised claim upto year 2014-2015 with a disallowance of $2.756 billion on cumulative basis and consequent demand of GoI share of additional profit petroleum of $246.90 million, also on cumulative basis. The number mentioned in the headline of the news item is a cumulative figure since commencement of the dispute.
RIL also clarified that GoI has already collected gross $81.7 million in Gas Pool Account, towards the aforesaid claim. RIL reiterated that all claims made by GoI are denied by the Contractor Group and currently part of an ongoing arbitration.
Shares of state-run power transmission major Power Grid Corporation of India rose 4.55% at Rs 182.50. The company said in an investor presentation on the first quarter results submitted to the stock exchanges that it is implementing projects worth about Rs 1.13 lakh crore (as of July 2016). It has identified new projects worth about Rs 15000 crore. The total works in hand is about Rs 1.44 lakh crore.
Cement shares edged higher on renewed buying. UltraTech Cement (up 4.41%), Ambuja Cements (up 0.87%) and ACC (up 0.68%), edged higher.
Grasim Industries rose 2.81%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Fertiliser shares edged higher. Zuari Global (up 5.94%), Deepak Fertilisers & Petrochemicals Corporation (up 4.47%), Tata Chemicals (up 1.46%), National Fertilizers (up 0.60%), Rashtriya Chemicals and Fertilisers (up 0.52%), Coromandel International (up 0.50%), Chambal Fertilisers & Chemicals (up 0.23%) and Fertilisers & Chemicals Travancore (up 0.22%), edged higher. Gujarat State Fertilizers & Chemicals was down 0.14%.
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