After languishing in negative zone in afternoon trade, key benchmark indices reversed direction in mid-afternoon trade. At 14:15 IST, the barometer index, the S&P BSE Sensex, was up 23.97 points or 0.09% at 26,737.90. The Nifty 50 index was currently up 5.15 points or 0.06% at 8,185.10.
The Sensex rose 38.27 points or 0.14% at the day's high of 26,752.20 in mid-afternoon trade. The barometer index lost 72.91 points or 0.27% at the day's low of 26,641.02 in early afternoon trade, its lowest level since 31 May 2016. The Nifty rose 10.15 points or 0.12% at the day's high of 8,190.10 in mid-afternoon trade. The index lost 25.20 points or 0.3% at the day's low of 8,154.75 in morning trade, its lowest level since 31 May 2016.
In overseas stock markets, Asian and European equities edged higher after the latest data signalled the US economy is recovering. The US economy is the world's biggest economy. Japanese stocks edged lower as the yen strengthened against the dollar. The Nikkei 225 Average settled 2.32% lower. A stronger yen hurts the competitiveness of Japanese exporters. Japan's Prime Minister Shinzo Abe yesterday, 1 June 2016, said that a sales-tax increase will be postponed until 2019 from April 2017.
In Europe, the key event of the day is the European Central Bank's (ECB) policy meeting later in the global day. The ECB is widely expected to keep its monetary policy unchanged but will probably raise growth and inflation forecasts. The central bank's President Mario Draghi will hold a press conference after the policy decision is announced.
US stocks eked out minuscule gains yesterday, 1 June 2016, following an intraday recovery in oil prices and better-than-expected manufacturing data. The Institute for Supply Management said its manufacturing index rose to 51.3% last month from 50.8% in April. The data showed that manufacturers are expanding their businesses at a very slow pace.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,128 shares rose and 1,348 shares declined. A total of 149 shares were unchanged. The BSE Mid-Cap index was currently up 0.4%. The BSE Small-Cap index was currently up 0.16%. Both these indices outperformed the Sensex.
Stocks of public sector banks edged higher. Union Bank of India (up 2.07%), Canara Bank (up 0.63%), Corporation Bank (up 0.29%), Bank of Baroda (up 0.43%) and State Bank of India (up 0.68%) rose. Bank of India (down 0.81%) and UCO Bank (down 0.87%) declined.
Punjab National Bank (PNB) was up 0.33% at Rs 77. PNB announced revision to its lending rates based on marginal cost of funds to be effective from 1 June 2016. PNB's Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 9.15%, for one month will be 9.20% and for three months will be 9.30%. The MCLR on 6-month loans will be 9.35% and for one-year loans the rate would be 9.40%, the bank said. MCLR for three-year loans would be at 9.55% and loans with five-year maturity would carry an MCLR of 9.70%, the bank said. The announcement was made after market hours yesterday, 1 June 2016.
All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
Bank of Maharashtra rose 1.62% at Rs 28.30 after the state-run bank said it has decided to raise up to Rs 1000 crore through follow-on public offer (FPO)/rights issue/ qualified institutional placement (QIP) etc. subject to the necessary approvals. The announcement was made during market hours today, 2 June 2016.
Stocks of private sector banks were mixed. Yes Bank (up 1.37%), ICICI Bank (up 0.1%) and IndusInd Bank (up 0.02%) edged higher. Kotak Mahindra Bank (down 0.55%) and HDFC Bank (down 0.21%) edged lower.
Axis Bank rose 1.04% at Rs 518.70 after the private sector bank said it has signed tripartite share subscription agreement and shareholders agreement with A.Treds and mjunction services (Mjunction). A.Treds is a subsidiary company of Axis Bank. Mjunction is a joint venture between Tata Steel and Steel Authority of India. Shares of Tata Steel were up 1.16% at Rs 336. Shares of Steel Authority of India were up 0.24% at Rs 41.95. As per the agreement, Axis Bank has been allotted 1.65 crore shares of A.Treds for Rs 16.50 crore and Mjunction was allotted 82.50 lakh shares of A.Treds for Rs 8.25 crore. Axis Bank now holds 67% stake and Mjunction holds 33% stake in A.Treds.
A.Treds is licensed by the Reserve Bank of India to engage in the business of trade receivables discounting systems (TReDS). Mjunction is the largest B2B e-commerce company in India. It is also the largest e-marketplace for steel in the world.
Separately, Axis Bank announced after market hours yesterday, 1 June 2016, that it has raised $500 million as senior fixed rate green bonds under the MTN programme. The notes have been priced at 160 basis points over the 5-year US Treasury Note, at a price of 99.479% to yield 2.988%. The notes will be denominated in US dollars and will bear fixed interest of 2.875% per annum, with interest payable semi-annually in arrears. The notes will be listed on the Singapore Stock Exchange and the London Stock Exchange.
Capital goods stocks edged higher. Crompton Greaves (up 9.31%), Suzlon Energy (up 2.65%), Bharat Heavy Electricals (up 0.89%), Havells India (up 1.04%), Bharat Electronics (up 0.5%) and Thermax (up 0.73%) edged higher. ABB India (down 0.98%), BEML (down 0.25%), Siemens (down 0.37%), Alstom T&D India (down 0.17%) and L&T (down 0.05%) edged lower.
Jyothy Laboratories rose 1.55% at Rs 284.10 after reports that German consumer goods major Henkel AG might invest in the company. Speculation about the German major Henkel AG's interest in the company has been growing in the past few months, report added. Henkel had the option to pick up to 26% stake in Jyothy five years after the latter acquired Henkel's Indian subsidiary in May 2011.
Henkel is said to be contemplating picking up the stake in Jyothy at Rs 500-600 a share, either through a fresh issue of shares or via a preferential allotment. A 25% shareholding by the German major will trigger a mandatory open-offer clause. This implies Henkel will have to offer to pick up an additional 26% report added.
Ullas Kamath, joint managing director and chief financial officer of Jyothy was quoted as saying that indications were positive that Henkel would put in a bid, though nothing had been finalised. The option for Henkel to invest in the company will end in March 2017, he added.
Meanwhile, the central government yesterday, 1 June 2016, announced increase ranging from 1.5% to 9.2% in the minimum support prices (MSPs) of Kharif crops for the 2016-17 season. The MSPs include a bonus of Rs 425 per quintal for pulses, namely Arhar (Tur), Urad and Moong, a bonus of Rs 200 per quintal for Sesamum and a bonus of Rs 100 per quintal for other kharif oilseeds namely, Groundnut-in-shell, Sunflowerseed, Soyabean, and Nigerseed. The government said in a statement that the decision to offer bonus over MSP on pulses and oilseeds is aimed at giving a strong price signal to farmers to increase acreage and invest for increase in productivity of these crops. There is an increasing gap between the demand and domestic supply of pulses and oilseeds and the reliance on import is increasing. The increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil.
With a view to stabilize prices of pulses, the government is also creating buffer stocks of pulses through both domestic procurement and import.
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