Favourable macroeconomic data aided gains for Indian stocks as trading for the week began. The barometer index, the S&P BSE Sensex, jumped 225.38 points or 0.88% at 25,835.59, as per provisional closing data. The 50-unit CNX Nifty rose 82.95 points or 1.06% at 7,872.25, as per provisional closing data. Metal, mining and power sector stocks led gains for key benchmark indices. The latest macroeconomic data showed pick up in industrial production growth, a benign current account deficit and wholesale prices continuing to remain in negative zone.
Shares of power sector companies and banking stocks gained on media reports that Prime Minister Narendra Modi is set to meet bosses of loss-making state-government run electricity utilities today, 14 September 2015, to debate a rescue package for the power transmission and distribution sector. Shares of steel makers gained on reports that the government will soon notify a 20% import tax on some hot-rolled steel products after a government body found evidence that rising imports from China, Japan, South Korea and Russia pose a threat to the domestic steel industry.
The market breadth indicating the overall health of the market was strong. On BSE, 1,690 shares rose and 965 shares declined. A total of 106 shares were unchanged. The BSE Mid-Cap index was up 1.27%, outperforming the Sensex. The BSE Small-Cap index was up 0.8%, underperforming the Sensex.
The total turnover on BSE amounted to Rs 1960 crore, lower than turnover of Rs 2624.52 crore registered during the previous trading session.
In overseas equity markets, stocks in China and Japan edged lower after Chinese data released over the weekend showed growth in China's factory output and fixed-asset investment were both weaker than expected in August 2015, a month when Beijing temporarily closed some factories ahead of a high-profile military parade. European stocks nudged higher after the latest data showed industrial production in the eurozone increased more rapidly than expected in July 2015.
US stocks edged higher during the previous trading session on Friday, 11 September 2015, on speculation the US Federal Reserve will not hike interest rates this month due to concerns about global growth and amid a recent turmoil in global equity markets. The Fed's policy-making committee holds a two-day meeting on 16 and 17 September 2015. The Fed has held its benchmark short-term interest rate near zero since December 2008.
Closer home, metal and mining stocks gained on renewed buying. National Aluminium Company (up 4.53%), Vedanta (up 3.81%), Hindustan Zinc (up 5.27%), NMDC (up 2.84%) and Hindalco Industries (up 3.88%) edged higher.
Shares of steel makers gained on reports that the government will soon notify a 20% import tax on some hot-rolled steel products after a government body found evidence that rising imports from China, Japan, South Korea and Russia pose a threat to the domestic steel industry. Jindal Steel & Power (up 3.96%), JSW Steel (up 3.02%), Tata Steel (up 3.28%) and Steel Authority of India (up 1.76%) edged higher. It may be recalled that the Director General of Safeguards last week recommended imposition of provisional safeguard duty of 20% on import of hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 MM or more for a period of 200 days. The safeguard duty is a global safeguard measure to protect the domestic industry and once imposed the levy is applicable on import of the product from all countries.
Shares of coal mining giant Coal India rose 1.69% at Rs 339.50.
Shares of power sector companies and banking stocks gained on media reports that Prime Minister Narendra Modi is set to meet bosses of loss-making state-government run electricity utilities today, 14 September 2015, to debate a rescue package for the power transmission and distribution sector. According to reports, the government has identified weak financials and high debt of state-government run electricity utilities as the key obstacles for the growth of the power sector in the country. According to reports, Indian banks have outstanding loans aggregating Rs 53000 crore to state-government run electricity utilities and there is a risk of majority of these loans turning into bad loans.
Among power sector stocks, Adani Power (up 5.17%), Reliance Power (up 4.18%), Reliance Infrastructure (up 3.28%), NTPC (up 5.1%), JSW Energy (up 2.57%), Tata Power (up 3.27%), GVK Power & Infrastructure (up 1.02%), Power Grid Corporation of India (up 2.74%) and Torrent Power (up 0.98%) edged higher. Shares of NHPC were unchanged at Rs 16.10.
Jaiprakash Power Ventures rose 3.27% at Rs 6. The company on Saturday, 12 September 2015, announced that its 400 megawatts (MW) Vishnuprayag hydro power plant, which was temporarily shut down with effect from 25 June 2015, has resumed power generation with effect from 11 September 2015. The company had to suspend operations at the power plant in June 2015 due unprecedented flood in river Alakhnanda.
On the macro front, lower global crude oil prices and a recovery in the rupee against the dollar augur well for India. India imports about 80% of its crude requirements and lower crude oil prices ease concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. In the global commodities markets, Brent for October settlement was currently off 37 cents at $47.77 a barrel. The contract had fallen 75 cents or 1.53% to settle at $48.14 a barrel during the previous trading session. The Brent October contract expires tomorrow, 15 September 2015. Brent for November settlement was currently off 34 cents at $48.70 a barrel.
A recovery in the rupee against the dollar has eased concerns about higher crude import costs. In the foreign exchange market, the partially convertible rupee was hovering at 66.36, compared with its close of 66.53 during the previous trading session. A weak rupee raises the cost of imports.
Meanwhile, the annual rate of inflation based on monthly wholesale price index (WPI) stood at minus 4.95% (provisional) for the month of August 2015 compared to minus 4.05% (provisional) for the previous month and 3.85% during the corresponding month of the previous year, according to the data released by the government during market hours today, 14 September 2015.
Meanwhile, data released after market hours on Friday, 11 September 2015 showed that India's current account deficit (CAD) narrowed to $6.2 billion (1.2% of GDP) in Q1 June 2015 from $7.8 billion (1.6% of GDP) a year ago. This improvement was mainly on account of the merchandise trade deficit ($34.2 billion during Q1 June 2015) which contracted on a year-on-year (y-o-y) basis due to a larger absolute decline in merchandise imports relative to merchandise exports. The reduction in the CAD was also enabled by higher net earnings through services and lower outflow on account of primary income (profit, dividend and interest).
Another data released after market hours on Friday, 11 September 2015, showed that India's index of industrial production (IIP) increased 4.2% in July 2015 over a year ago compared with the revised growth of 4.4% in June 2015. The IIP growth for June 2015 has been scaled up 4.4% in the first revision compared with 3.8% reported provisionally.
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