Optimism over the progress of key legislation in parliament and gains in European stocks aided a rally on the domestic bourses. The barometer index, the S&P BSE Sensex, rose 468.14 points or 1.86% at 25,696.64, as per the provisional closing data. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty gained 132.60 points or 1.71% at 7,866.05, as per the provisional closing data. The Sensex hit its highest level in more than a week and the Nifty hit its highest level in almost a week as these two key benchmark indices extended gains in late trade.
The latest rally on the domestic bourses was triggered by optimism over the progress of key legislation in parliament after the the Lok Sabha, last week, passed a key economic bill viz. the Insolvency and Bankruptcy Code, 2015. Once the bill becomes a law, it will help creditors recover bad debt faster. The bankruptcy bill aims to provide single unified law for timely resolution of insolvency and bankruptcy related cases in India. The Lok Sabha passed the Insolvency and Bankruptcy Code, 2015 on 5 May 2016. The bill will now go to the Rajya Sabha for its passage.
The focus now shifts to another key economic bill pending for its passage in Rajya Sabha viz. the Goods and Services Tax (GST) bill. The constitutional amendment bill for the implementation of GST, which subsumes all indirect taxes to create a unified market across the country, has been cleared by the Lok Sabha and is awaiting legislative passage in the Rajya Sabha. For the bill to become a law, the GST bill also needs to be approved by half the state assemblies.
In overseas stock markets, European stocks extended intraday gains after the latest data showed German manufacturing orders rebounded sharply in March 2016.
The Sensex jumped 481.18 points or 1.9% at the day's high of 25,709.68 in late trade, its highest level since 29 April 2016. The barometer index rose 74.36 points or 0.29% at the day's low of 25,302.86 at the onset of the trading session. The Nifty gained 140.20 points or 1.81% at the day's high of 7,873.65 in late trade, its highest level since 3 May 2016. The index rose 20.10 points or 0.25% at the day's low of 7,753.55 at the onset of the trading session.
After opening higher, the two key indices hovered in positive zone throughout the trading session. All the nineteen sectoral indices on BSE registered gains.
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In overseas stock markets, European stocks extended initial gains after the latest data showed German manufacturing orders rebounded sharply in March 2016. Total orders for Germany's important manufacturing sector--adjusted for seasonal swings and calendar effects--jumped 1.9% in March from the month before. Increase in foreign orders led the gains. Domestic orders, however, dropped 1.2% in March from the preceding month. The German economy is Europe's biggest economy.
Earlier during the global day, Asian stocks ended on a mixed note. Stocks fell in mainland China after the latest data showed that China's exports and imports fell more than expected in April, underlining weak demand at home and abroad. The Shanghai Composite ended 2.79% lower. In Hong Kong, the Hang Seng index settled 0.23% higher. China's exports declined 1.8% in April in dollar terms, reversing an increase of 11.5% the previous month, the General Administration of Customs said yesterday, 8 May 2016. Imports in April fell by a sharper-than-expected 10.9% from a year earlier, compared with a 7.6% drop in March.
US stocks posted modest gains on Friday, 6 May 2016, as a weaker-than-expected April job report fanned expectations that the Federal Reserve will delay raising interest rates. US non-farm payrolls increased by 160,000 in April, the smallest gain since September, and below market expectations. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 14-15 June 2016.
Closer home, the market breadth indicating the overall health of the market was strong. On BSE, 1,665 shares rose and 973 shares fell. A total of 169 shares were unchanged. The BSE Mid-Cap index provisionally rose 1.25%. The BSE Small-Cap index provisionally gained 1.07%. Both these indices underperformed the Sensex.
Total turnover on BSE amounted to Rs 2262 crore, higher than turnover of Rs 1990.71 crore registered during the previous trading session.
Index heavyweight and cigarette maker ITC rose after the company yesterday, 8 May 2016, announced that the manufacturing of cigarettes at its factories will commence progressively. The stock rose 2.55%. The company had 4 May 2016 announced temporary closure of its cigarette factories until it is in a position to comply with the rules on pictorial warnings on cigarette packs. While passing an order on 4 May 2016 transferring all writ petitions pending in various courts challenging the rules prescribing 85% pictorial warnings on cigarette packs to the Karnataka High Court, the Supreme Court said at that time all parties should endeavour to follow the existing rules on pictorial warnings on cigarette packs. The government had notified that cigarette companies have to carry warning over 85% of the pack from 1 April 2016, sharply higher than earlier 40% of the pack.
FMCG major Hindustan Unilever (HUL) edged lower in choppy trade after the company reported tepid volume growth in its domestic consumer business in Q4 March 2016. The stock dropped 0.23% at Rs 851. The stock hit high of Rs 869 and low of Rs 840.25 in intraday trade. The company's net profit rose 7.02% to Rs 1089.59 crore on 3.26% rise in total income to Rs 8027.91 crore in Q4 March 2016 over Q4 March 2015. The growth in net profit in Q4 March 2016 was adversely impacted by base effect. HUL said it had booked higher exceptional income in Q4 March 2015 from the sale of subsidiary. Net profit before exceptional items rose 13% to Rs 1031 crore in Q4 March 2016 over Q4 March 2015.
HUL said net sales of its domestic consumer business grew 3.6% on year on year basis in Q4 March 2016. The growth rate was adversely impacted due to phasing out of excise duty incentives, a one-time credit for excise duty refund in Q4 March 2015 and marginal price degrowth. Volume growth stood at 4% on year on year basis in Q4 March 2016.
Grasim Industries rose after the company announced strong Q4 results. The stock rose 1.07%. The company's consolidated net profit rose 37.38% to Rs 696.09 crore on 13.69% rise in net sales to Rs 9896.43 crore in Q4 March 2016 over Q4 March 2015. The result was announced on Saturday, 7 May 2016. Grasim Industries' earnings before interest, taxes, depreciation and amortization (EBITDA) rose 24.19% to Rs 2059 crore in Q4 March 2016 over Q4 March 2015. Grasim Industries said it has posted impressive results led by robust volume growth in all its businesses viz. viscose staple fibre (VSF), chemical and cement. During the year, under a court approved scheme of amalgamation, Aditya Birla Chemicals (India) (ABCIL), has been amalgamated with the company from the appointed date of 1 April 2015. In view of amalgamation of ABCIL with the company, the results for the quarter and the year ended 31 March 2016 are not strictly comparable with corresponding periods of the previous year.
With regard to the future outlook for the VSF business, Grasim said that VSF capacity addition has slowed down globally. Further, cotton production is projected to be lower than the consumption in the 2015-16 season with reduced acreage and unfavorable climate. As a result, the price volatility of VSF is expected to reduce. The company will continue to focus on expanding VSF market in India by partnering with the textile value chain and better customer connect through its Liva brand. Enhancing product mix through larger share of specialty fibre will be yet another focus area.
With regard to the future business outlook for the caustic soda business, Grasim said that the caustic soda demand in India is expected to grow with increase in demand from the end user industry. To meet the growing demand, Grasim is expanding its caustic soda capacity by 100,000 tonnes per annum through debottlenecking at different units. With regard to the future business outlook for the cement business, Grasim said that cement demand is expected to grow at 7%-8% in the year ending 31 March 2017, driven by the government's focus on infrastructure development, housing, smart cities etc. The company is well positioned across the country to cater the growth in demand.
Grasim has exposure to the cement sector through its holding in UltraTech Cement.
UltraTech Cement gained after the company announced that its board of directors approved a proposal for increase in investment limits by registered foreign portfolio investors (RFPIs) including foreign institutional investors (FIIs) from the existing 24% of the paid-up equity share capital to 30%. The stock rose 1.79%. The increase in the limits is subject to the approval of the shareholders at the ensuing Annual General Meeting of the company to be held in July 2016, the date of which will be intimated separately. The announcement was made during market hours today, 9 May 2016.
Tata Motors rose after the company's British luxury car making unit Jaguar Land Rover reported 11% growth in retail sales to 41,341 vehicles in April 2016 over April 2015. The stock rose 0.87%.
Jyothy Laboratories rose 2.74% to Rs 308 after a bulk deal of 5.84 lakh shares was executed on the scrip at Rs 301.95 per share at 10:45 IST on BSE today, 9 May 2016.
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