Key benchmark indices extended gains and hit fresh intraday high in afternoon trade with the barometer index, the S&P BSE Sensex and the Nifty 50 index, both, hitting their highest level in nearly 11 months. At 13:21 IST, the Sensex was up 463.27 points or 1.71% at 27,592.99. The gains for the Nifty index were lower than those for the Sensex in percentage terms. The Nifty was currently up 133.40 points or 1.6% at 8,456.60. Gains in global stocks aided the upmove on the domestic bourses.
Global stocks edged higher as stronger-than-expected US jobs report suggested that the US economic recovery was back on track. The Fed funds futures market data showed that investors are not pricing in a rate increase from the US Federal Reserve in calendar year 2016 despite the strong jobs report for June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015. A delay in interest rate increases from the Fed would slow capital flight from emerging markets.
The Sensex jumped 495.83 points or 1.82% at the day's high of 27,622.73 in afternoon trade, its highest level since 20 August 2015. The barometer index rose 231.33 points or 0.85% at the day's low of 27,358.23 in opening trade. The Nifty jumped 144.50 points or 1.73% at the day's high of 8,467.70 in afternoon trade, its highest level since 20 August 2015. The index rose 83.85 points or 1.01% at the day's low of 8,407.05 at onset of trading session.
In overseas stock markets, European stocks and Asian stocks edged higher as stronger-than-expected US jobs report suggested that the US economic recovery was back on track. The Fed funds futures market data showed that investors are not pricing in a rate increase from the US Federal Reserve in calendar year 2016 despite the strong jobs report for June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015. A delay in interest rate increases from the Fed would slow capital flight from emerging markets. Japanese stocks surged as investors saw poll results for Japan's upper house as signaling new rounds of economic and political reforms by the coalition government led by Prime Minister Shinzo Abe. The Nikkei 225 Average closed 3.98% higher. In the upper house elections held yesterday, 10 July 2016, Abe's ruling coalition led by his Liberal Democratic Party won a landslide victory, making it far easier for Abe to push through his economic agenda dubbed Abenomics.
US stocks edged higher during the previous trading session on Friday, 8 July 2016, as strong June employment report bolstered investor sentiment on the strength of the economy. US employers in June added a seasonally adjusted 287,000 jobs, the strongest month of hiring since last October, according to the Labor Department report. That was a sharp rebound from May, when hiring sagged to 11,000, the weakest reading since the economy stopped shedding jobs in 2010. The unemployment rate rose to 4.9% from 4.7%, suggesting that more people entered the labor force, given the better-than-expected headline number.
Closer home, the broad market depicted strength. There were more than two gainers against every loser on BSE. 1,739 shares gained and 815 shares declined. A total of 147 shares were unchanged. The BSE Mid-Cap index was currently up 1.57%. The BSE Small-Cap index was currently up 0.94%. Both these indices underperformed the Sensex.
Capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 1.27%), Havells India (up 0.55%), ABB India (up 1.23%), Bharat Electronics (up 0.52%), Crompton Greaves (up 3.03%), and Siemens (up 2.28%) gained.
Shares of engineering and construction major L&T rose 1.76% as the company's subsidiary and IT outsourcing services provider Larsen & Toubro Infotech known as L&T Infotech's initial public offer (IPO) commenced today, 11 July 2016. L&T Infotech's promoter L&T is selling a part of its stake through the IPO of L&T Infotech. L&T Infotech will not get any funds from the IPO and the entire sale proceeds will go to parent L&T. L&T is selling 1.75 crore shares of L&T Infotech through the IPO. The price band for the IPO has been fixed at Rs 705-710 per share. The IPO opened for bidding today, 11 July 2016 and closes on Wednesday, 13 July 2016.
Meanwhile, as per media reports, the central government has finally made up its mind to sell minority stakes held in many listed and unlisted companies through the Specified Undertaking of the Unit Trust of India (SUUTI), in a bid to meet its asset-sale target. The government invited bids from bankers for the mandate to manage the stake-sale process, reports suggested. SUUTI held 8.15% stake in L&T as per the shareholding pattern as on 31 March 2016.
The BSE Capital Goods index had outperformed the market over the past one month till 8 July 2016, rising 1.98% compared with Sensex's 0.39% rise. The index had also outperformed the market in past one quarter, advancing 18.47% as against Sensex's 9.94% rise.
Metal & mining stocks gained as copper prices rose in global commodity markets. JSW Steel (up 1.8%), Bhushan Steel (up 1.2%), Hindustan Copper (up 0.73%), Vedanta (up 2.76%), Hindalco Industries (up 1.5%), Hindustan Zinc (up 1.79%), Jindal Steel & Power (up 3.52%), Steel Authority of India (Sail) (up 1.18%), National Aluminum Company (up 0.91%) and NMDC (up 1.85%) gained.
High Grade Copper for September 2016 delivery was currently up 2.05% at $2.1625 per pound on the COMEX.
Tata Steel rose after the company said it entered into discussions with strategic players in the steel industry for its European businesses. The stock rose 1.98%. The announcement was made after trading hours on Friday, 8 July 2016. Tata Steel announced that it has entered into discussions with strategic players in the steel industry, including Thyssenkrupp AG for a strategic collaboration for its European businesses. The decision has been taken as an alternative to the ongoing process for the divestment of loss making Tata Steel UK. Tata Steel said that the discussions for strategic collaboration are currently at preliminary stage and there is no certainty of a transaction as the outcome depends on consultation and negotiations with various stakeholders. Tata Steel also said it would begin separate processes for the sale of its South Yorkshire specialty steels business and the Hartlepool pipe mills, excluding the 20-inch tube mill, in the UK. Tata Steel has already received interest from several bidders for these two businesses and the formal process for the sale of the businesses will commence shortly.
The BSE Metal index had outperformed the market over the past one month till 8 July 2016, rising 5.79% compared with Sensex's 0.39% rise. The index had also outperformed the market in past one quarter, advancing 15.83% as against Sensex's 9.94% rise.
Bajaj Finance surged 5.7% to Rs 8,655.90 after the company said that its board of directors will consider stock-split and bonus issue proposals at a meeting scheduled on 26 July 2016. The announcement was made during market hours today, 11 July 2016.
Cadila Healthcare rose 4.16% after the company said it received final approval from the US drug regulator for an oral anti-diabetic drug. The company made the announcement during trading hours today, 11 July 2016. The company said that it received the final approval from the US Food and Drug Administration (USFDA) to market Nateglinide Tablets USP in strengths of 60 milligram (mg) and 120 mg. The drug is an oral anti-diabetic agent used in the management of Type 2 diabetes mellitus. It will be produced at the group's formulations manufacturing facility at the pharma special economic zone (SEZ) in Ahmedabad.
Meanwhile, as per the monthly data released by the Association of Mutual Funds in India (AMFI), equity mutual fund schemes including tax saving equity schemes known as Equity Linked Saving Schemes (ELSS) received net inflow of Rs 320 crore in June 2016. The inflow would have been much higher if one excludes large redemption of arbitrage funds. Media reports suggest that there was redemption of Rs 3500 crore from arbitrage funds in June 2016. AMFI does not give separate data on arbitrage funds. It clubs arbitrage funds under the equity fund category. Meanwhile, balanced funds received net inflow of Rs 2402 crore in June 2016. Balanced funds typically have 65-70% of their portfolio invested in equities and 30-35% in debt.
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