Amid a divergent trend among various index constituents, key benchmark indices eked out small gains on first trading day of the week and the month. Benchmark indices witnessed intraday volatility. Yet, the intraday movement for the benchmark indices was within a relatively narrow range. The barometer index, the S&P BSE Sensex, was provisionally up 44.90 points or 0.16% at 28,159.46. Gains for the Sensex in percentage terms were higher than those for the 50-unit CNX Nifty. The Nifty was provisionally up 10.20 points or 0.12% at 8,543.05. The reason for higher gains for Sensex than Nifty was a post result slide in shares of HCL Technologies which is a Nifty constituent but is not a part of the Sensex. The market breadth indicating the overall health of the market was strong.
Index heavyweight and housing finance major HDFC declined. PSU bank stocks edged higher after the finance ministry after trading hours on Friday, 31 July 2015, unveiled a long-term four-year plan for capitalization of PSU banks. Shares of state-run oil marketing (PSU OMCs) fell after cutting petrol, diesel and jet fuel prices.
Meanwhile, the outcome of a monthly survey today, 3 August 2015, showed that manufacturing business conditions across India improved further in July 2015.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 277.77 crore during the previous trading session on Friday, 31 July 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1021.34 crore on Friday, 31 July 2015, as per provisional data released by the stock exchanges.
In overseas markets, European stocks edged higher with investors sorting through a fresh round of earnings reports, as the Greek equity market fell as it reopened for trading after a five-week halt. Asian stocks edged lower amid jitters about weakening Chinese manufacturing data and continued declines in commodity prices. Energy stocks led decline in US market during the previous trading session on Friday, 31 July 2015, after two energy giants Exxon Mobil and Chevron reported decline in their earnings.
As per provisional closing, the S&P BSE Sensex was up 44.90 points or 0.16% at 28,159.46. The index jumped 148.79 points at the day's high of 28,263.35 in mid-afternoon trade, its highest level since 24 July 2015. The index fell 43.19 points at the day's low of 28,071.37 in early trade.
The CNX Nifty was up 10.20 points or 0.12% at 8,543.05. The index hit a high of 8,563.95 in intraday trade, its highest level since 24 July 2015. The index hit a low of 8,508.10 in intraday trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,769 shares gained and 1,142 shares fell. A total of 112 shares were unchanged.
The BSE Mid-Cap index was up 51.32 points or 0.46% at 11,324.34. The BSE Small-Cap index was up 100.30 points or 0.85% at 11,931.10. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3710 crore, lower than turnover of Rs 3927.59 crore registered during the previous trading session.
Index heavyweight and housing finance major HDFC fell 1.43% to Rs 1,320. The stock hit high of Rs 1,350.50 and low of Rs 1,315.
Shares of state-run oil marketing (PSU OMCs) fell after cutting petrol, diesel and jet fuel prices. HPCL (down 1.62%), BPCL (down 1.88%) and Indian Oil Corporation (IOCL) (down 1.68%) declined.
Indian Oil Corporation (IOCL) after trading hours on Friday, 31 July 2015, announced reduction in petrol and diesel prices with effect from 1 August 2015. The retail selling price of petrol was decreased by Rs 2.43 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of petrol in Delhi has become Rs 64.47 per litre. The retail selling price of diesel was reduced by Rs 3.60 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of diesel in Delhi has become Rs 46.12 per litre. The announcement was made after trading hours on Friday, 31 July 2015.
IOCL said that since last price change on 16 July 2015, there has been a decrease in international prices of both petrol and diesel. Rupee-dollar exchange rate has, however, depreciated during this period. Combined impact of both these factors warranted a downward revision in prices, the impact of which is being passed on to the consumers with this price decrease. The movement of prices in international oil market and rupee-dollar exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes, IOCL said in a statement.
IOCL also announced reduction in jet fuel prices by 9.47% at Rs 46,407.36 per kilolitre in Delhi, with corresponding changes in other states. The revised prices took effect from 1 August 2015. PSU OMCs review jet fuel prices on the last day of the month based on the average imported oil price for the month.
IOCL further announced reduction in prices of non subsidised 14.2 kilograms liquified petroleum gas (LPG) cylinder by Rs 23.50 or 3.86% to Rs 585 per cylinder in Delhi, with corresponding changes in other states. The revised prices took effect from 1 August 2015.
PSU bank stocks advanced after the finance ministry after trading hours on Friday, 31 July 2015, unveiled a long-term four-year plan for capitalization of PSU banks. State Bank of India (SBI) (up 4.11%), Punjab National Bank (up 2.98%), Bank of Baroda (up 4.09%), Canara Bank (up 5.7%), IDBI Bank (up 3.87%), Bank of India (up 2.42%) and Union Bank of India (up 5.11%) gained.
The finance ministry after trading hours on Friday, 31 July 2015, unveiled a long-term four-year plan for capitalization of PSU banks. The government proposes to make available a total Rs 70000 crore out of budgetary allocations for four years for capitalization of PSU banks. The government will pump in Rs 25000 crore for capitalization of PSU banks during the current financial year 2015-16. It will make available Rs 25000 crore in 2016-17 and Rs 10000 crore each in 2017-18 and 2018-19 for capitalization of PSU banks.
According to the finance ministry's estimates, PSU banks will require about Rs 1.8 lakh crore of extra capital over a period of four years until 2018-19. Of this requirement, PSU banks will be able to raise Rs 1.1 lakh crore from financial markets on the back of an expected improvement in their valuation. As of now, the PSU banks are adequately capitalized and are meeting all the Basel III and RBI norms. However, the government wants to adequately capitalize all PSU banks to keep a safe buffer over and above the minimum norms of Basel III.
The Rs 25000-crore earmarked for PSU bank recapitalization this year will be allocated in three tranches. In the first tranche, the government will make available about Rs 10000 crore to those banks which require support and every single bank will be brought to the level of at least 7.5% by Financial Year 2016. In the second tranche, about Rs 10000 crore will be allocated to top six big PSU banks viz. State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank and IDBI Bank in order to strengthen them to play a vital role in the economy. In the third and final tranche, the remaining Rs 5000 crore will be allocated to the banks based on their performance during the three quarters in the current year judged on the basis of certain performance parameters. This will incentivize them to improve their performance in the current year, according to a statement from the finance ministry.
Meanwhile, further reduction in diesel prices announced by state-run oil marketing companies on Friday, 31 July 2015, will reduce fuel price inflation. Diesel is a key transportation fuel. Indian Oil Corporation (IOCL) after trading hours on Friday, 31 July 2015, announced reduction in petrol and diesel prices with effect from 1 August 2015. The retail selling price of diesel was reduced by Rs 3.60 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of diesel in Delhi has become Rs 46.12 per litre. The retail selling price of petrol was reduced by Rs 2.43 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of petrol in Delhi has become Rs 64.47 per litre.
Meanwhile, in the global commodities markets, Brent crude oil futures edged lower on worries of oversupply as the Organization of the Petroleum Exporting Countries (OPEC) pumped at record levels in July, while weak Chinese data stoked concerns about slower growth at the world's second largest oil consumer. Brent for September settlement was currently off $1.06 a barrel at $51.15 a barrel. The contract had fallen $1.1 a barrel or 2.06% to settle at $52.21 a barrel during the previous trading session.
India imports about 80% of its crude requirements and a decline in crude eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure.
Meanwhile, the outcome of a monthly survey today, 3 August 2015, showed that manufacturing business conditions across India improved further in July 2015. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) printed a six-month high of 52.7 in July 2015, up from 51.3 in June 2015. Underpinning the rise in production levels was a sharper increase in new business inflows. Growth of new orders gathered pace across the three broad areas of the manufacturing economy. Anecdotal evidence highlighted stronger demand from both domestic and foreign clients. Reflecting the rebound in new orders, Indian manufacturers raised their buying levels in July. The rate of expansion was marked and faster than in June.
Despite the uptick in growth, Indian manufacturers continued to cut workforce numbers in July. Nonetheless, the rate of job shedding was only marginal as around 96% of panellists reported no change in employment from the levels recorded in the prior month. Purchase prices for Indian manufacturers rose further in July. Despite quickening since June, the rate of inflation was only marginal and well below the series long-run trend. Selling prices were unchanged on average, with companies highlighting efforts to secure new business.
Meanwhile, the Reserve Bank of India's (RBI)'s third bi-monthly monetary policy statement is due at 11:00 IST tomorrow, 4 August 2015. The RBI had cut its benchmark lending rate viz. the repo rate by 25 basis points to 7.25% after a monetary policy review on 2 June 2015.
Meanwhile, India's weather office, the India Meteorological Department (IMD), said in a daily report issued yesterday, 2 August 2015, said that the Southwest Monsoon was vigorous over Jharkhand and was active over Gangetic West Bengal during past 24 hours until 8:30 IST. For the country as a whole, cumulative rainfall during this year's monsoon season was 6% below the Long Period Average (LPA) until 2 August 2015. Region wise, the rainfall was 21% below the LPA in South Peninsula, 7% below the LPA in East & Northeast India, 6% below the LPA in Central India and 9% above the LPA in Northwest India until 2 August 2015.
The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
In overseas markets, European stocks edged higher today, 3 August 2015, with investors sorting through a fresh round of earnings reports, as the Greek equity market fell as it reopened for trading after a five-week halt. Key benchmark indices in France and Germany were up 0.28% to 0.38%. In UK, the FTSE 100 was off 0.12%.
In Greece, the Athex Composite index tumbled after trading on the Greece stock market resumed after a five-week shutdown. The Athex Composite was currently off 17.71% at 656.24. Trading on the Greece stock market was suspended on 29 June 2015 after Greek Prime Minister Alexis Tsipras called a referendum on the country's bailout terms.
Meanwhile, the final results of a survey of purchasing managers at eurozone factories released today, 3 August 2015 showed activity grew slightly more rapidly than first estimated, and roughly in line with June.
Markit's Eurozone manufacturing PMI hit 52.4 in July, ahead of the earlier flash estimate of 52.2, slightly below June's 52.5 but above the crucial 50 mark which indicates growth.
Asian stocks edged lower today, 3 August 2015, amid signs of a deepening slowdown in China's economy, the world's second-largest economy. Key benchmark indices in Indonesia, Singapore, Taiwan, Japan and South Korea fell by 0.05% to 1.63%.
Weak manufacturing data dragged Chinese stocks. In mainland China, the Shanghai Composite dropped 1.11%. In Hong Kong, the Hang Seng index fell 0.91%.
A gauge of China's factory activity slipped in July, pointing to further sluggishness in the key manufacturing sector of the world's second-largest economy. China's official manufacturing purchasing managers index slipped to 50 in July from 50.2 in June, the National Bureau of Statistics said Saturday, 1 August 2015. A reading of 50 is right at the cutoff point between expansion and contraction compared with the previous month.
The official gauge was still better than a competing measure compiled by research house Markit and Chinese media firm Caixin. Their preliminary PMI estimate was below the 50 level at 48.2--the lowest reading in 15 months.
Energy stocks led decline in US market during the previous trading session on Friday, 31 July 2015, after two energy giants Exxon Mobil and Chevron reported decline in their earnings. Investors also were debating whether data showing weak wage growth could prompt the Federal Reserve to think twice about raising interest rates in September. The wages and benefits that companies, governments and nonprofit institutions pay their employees rose a record-low 0.2% in the second quarter, according to the employment cost index released by the Labor Department. Separately, Chicago PMI rose in July to the highest level since January, suggesting a pickup in business during the summer.
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