After trimming gains in early afternoon trade, key benchmark indices firmed up once again in afternoon trade. At 13:17 IST, the barometer index, the S&P BSE Sensex, was up 135.61 points or 0.51% at 26,803.57. The Nifty 50 index was currently up 38.15 points or 0.47% at 8,198.25. Data showing acceleration in growth in India's gross domestic product in Q4 March 2016, a sharp pick up in growth in core sector in April 2016 and fiscal deficit meeting the target for fiscal year 2015-16 aided the upmove on the bourses.
The market breadth indicating the overall health of the market was positive. On BSE, 1,371 shares rose and 1,075 shares declined. A total of 144 shares were unchanged. The BSE Mid-Cap index was currently up 0.18%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.54%, outperforming the Sensex.
On the macro front, the latest data showed that India's gross domestic product (GDP) growth accelerated to 7.9% in Q4 March 2016 compared with a revised reading of a growth of 7.2% in Q3 December 2015. For the fiscal year 2015-16, GDP grew 7.6%, which was higher than 7.2% growth recorded in 2014-15. The government released the GDP data after market hours yesterday, 31 May 2016. Another data released by the government after market hours yesterday, 31 May 2016, showed the output of eight core infrastructure industries carrying 38% of the weight in the Index of Industrial Production (IIP) increased at 18-months high pace of 8.5% in April 2016.
Meanwhile, the finance ministry said that as per the provisional accounts for 2015-16, the fiscal deficit in 2015-16 stands at 3.9% of GDP, meeting the target set by the government. This is a significant improvement over the fiscal deficit of 4.1% in 2014-15 and 4.7% in 2013-14. Revenue deficit has also shown significant improvement due to a sharp increase in capital expenditure of the central government. Revenue deficit improved to 2.5% of GDP in 2015-16 from 2.9% in 2014-15. There was also an increase in the Plan Expenditure in 2015-16 despite substantial increase in share of tax devolution to the States.
Meanwhile, the outcome of a monthly survey today, 1 June 2016, showed slight expansion in growth in India's manufacturing sector in May 2016. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) edged higher to 50.7 in May from 50.5 in April. The rate of growth in output as well as new orders was well below trend. New export orders fell for the first time in 32 months. Sub-sector data highlighted intermediate goods as the best performing category in May, where growth rates for new orders and output were stronger than those seen among consumer goods producers. Investment goods firms, in contrast, saw further declines in new work and production.
Although firms passed on to their clients part of the additional increase in costs by way of raising selling prices, the rate of charge inflation eased to the weakest in the current three-month sequence of increases despite cost inflation climbing to a 14-month high.
In overseas stock markets, European stocks edged lower in early trade today, 1 June 2016, after the release of mixed manufacturing activity data from China and as a decline in oil prices weighed on sentiment, while investors awaited the release of euro zone manufacturing data due later in the day. Chinese stocks were mostly lower after the release of the monthly manufacturing and non-manufacturing data. In mainland China, the Shanghai Composite index settled 0.11% lower. In Hong Kong, the Hang Seng index was currently down 0.26%. An official measure of China's manufacturing sector held steady in May while a private gauge edged down slightly. China's official purchasing managers' index for manufacturing remained at 50.1 last month, the same level as in April and the third consecutive month the index kept above 50, the line separating expansion from contraction. The competing private Caixin manufacturing PMI index slipped to 49.2 in May from 49.4 in April, the fifteenth consecutive month of contraction. Another data showed that China's official non-manufacturing PMI fell to 53.1 from 53.5 in April.
US stocks ended mostly lower yesterday, 31 May 2016, as investors turned cautious ahead of key economic reports this week for indications on the pace and timing of the next interest rate hike. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The Federal Reserve has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Bharat Heavy Electricals (Bhel) was down 0.75% to Rs 119.80. The company announced during trading hours today, 1 June 2016, that it successfully commissioned another 520 megawatts (MW) coal-based thermal generating unit in Andhra Pradesh. The unit has been commissioned at the 2x520 MW Vizag Thermal Power Project of Hinduja National Power Company (HNPCL), Visakhapatnam.
Most metal shares edged lower, tracking weakness in copper prices. Jindal Steel & Power (down 1.97%), Vedanta (down 1.85%), Hindalco Industries (down 1.76%), National Aluminium Company (down 1.28%), Steel Authority of India (down 0.94%), NMDC (down 0.91%), JSW Steel (down 0.73%) and Hindustan Zinc (down 0.5%), edged lower. Bhushan Steel (up 0.69%) and Hindustan Copper (up 1.21%), edged higher.
Meanwhile, copper price edged lower in the global commodities markets. High Grade Copper for July 2016 delivery was currently down 1.46% at $2.0650 per pound on the COMEX.
Tata Steel dropped in volatile trade. Tata Steel was down 0.28% at Rs 333.50. The stock hit a high of Rs 339.40 and a low of Rs 333.20 so far during the day. Tata Steel UK announced the completion of the sale of its Long Products Europe business to Greybull Capital LLP. The announcement was made after market hours yesterday, 31 May 2016. Tata Steel said that during the last twelve months, the Long Products Europe business has implemented a transformation plan including a portfolio restructuring of assets, underpinned by committed support from employees and their trade unions. This has focused the business on higher-value markets supported by a more competitive cost base. The Long Products Europe business, which in the UK includes the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a rail mill in northern France, will trade under the name of British Steel. All together the business employs 4,800 people - 4,400 in the UK and 400 in France. The sale follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital.
Bimlendra Jha, Executive Chairman of the Long Products Europe business and CEO of Tata Steel UK said that Tata Steel hopes that under Greybull ownership, the business will continue the momentum of the improvement program that has been initiated in the last 12 months.
FMCG shares were mixed. Nestle India (up 2.75%), Britannia Industries (up 1.92%), GlaxoSmithKline Consumer Healthcare (up 1.26%), Marico (up 1.14%), Bajaj Corp (up 1.05%), Hindustan Unilever (up 0.56%), Procter & Gamble Hygiene & Health Care (up 0.35%) and Tata Global Beverages (up 0.34%), edged higher. Godrej Consumer Products (down 0.07%), Dabur India (down 0.17%), Colgate Palmolive (India), (down 0.87%) and Jyothy Laboratories (down 0.92%), edged lower.
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