Key benchmark indices edged higher as sentiment was boosted after the Union Cabinet today, 31 August 2016 gave ex-post-facto approval for the foreign direct investment (FDI) policy amendments announced by the Government in June this year. The barometer index, the S&P BSE Sensex rose 92.43 points or 0.33% at 28,435.44, as per the provisional closing data. The gains for the Nifty 50 index were higher than the Sensex's gains in percentage terms. The Nifty gained 41.85 points or 0.48% at 8,786.20, as per the provisional closing data. The Sensex hit highest level in more than thirteen months in mid-afternoon trade. The Nifty hit highest level in more than sixteen months in mid-afternoon trade. Key indices gained for the third day in a row today, 31 August 2016.
The Union Cabinet chaired by the Prime Minister Narendra Modi gave its ex-post-facto approval today, 31 August 2016 for the foreign direct investment (FDI) policy amendments announced by the Government on 20 June 2016. The Cabinet approved liberalization of FDI rules in aviation, pharmaceutical, defence, trading in food products and single brand retail trading. The FDI policy amendments are meant to liberalise and simplify the FDI policy so as to provide ease of doing business in the country leading to larger FDI inflows contributing to growth of investment, incomes and employment, government said in a statement.
The Sensex rose 189.24 points or 0.66% at the day's high of 28,532.25 in mid-afternoon trade, its highest level since 23 July 2015. The barometer index gained 20.09 points or 0.07% at the day's low of 28,363.10 at the onset of the trading session. The Nifty rose 74.85 points or 0.85% at the day's high of 8,819.20 in mid-afternoon trade, its highest level since 15 April 2015. The index gained 9.70 points or 0.11% at the day's low of 8,754.05 at the onset of the trading session.
The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,355 shares fell and 1,319 shares rose. A total of 230 shares were unchanged. The BSE Mid-Cap index provisionally rose 0.4%. The BSE Small-Cap index provisionally gained 0.37%. Both these indices outperformed the Sensex.
In overseas stock markets, European stocks were mixed today, 31 August 2016, as global markets gear up for Friday's US jobs report. The non-farm payrolls report will be eagerly watched by the US Federal Reserve and could determine whether the central bank increases interest rates in September. Asian stocks also settled mixed. US stocks slipped yesterday, 30 August 2016, as the dollar strengthened on expectations that the Federal Reserve was moving closer to raising interest rates. US consumer confidence rose to an 11-month high in August, with households more upbeat about the labour market, data showed overnight.
The total turnover on BSE amounted to Rs 3223 crore, lower than turnover of Rs 3458.43 crore registered during the previous trading session.
BPCL dropped 1.22% after the average gross refining margin (GRM) fell to $6.09 per barrel in Q1 June 2016 from $8.55 per barrel in Q1 June 2015. The company's net profit rose 11% to Rs 2620.50 crore on 2.98% decline in total income to Rs 57380.65 crore in Q1 June 2016 over Q1 June 2015. The result was announced during market hours today, 31 August 2016.
Construction stocks rose after the Union Cabinet approved initiatives to revive the construction sector. HCC (up 19.83%), Unity Infraprojects (up 12.27%), Gammon Infrastructure Projects (up 4.88%), NCC (up 3.09%), Valecha Engineering (up 2.06%), Tarmat (up 0.11%), Patel Engineering (up 1.39%), KNR Constructions (up 2.86%), NBCC (up 0.02%), RPP Infra Projects (up 0.79%), and Sunil Hitech (up 0.01%), edged higher. Man Infraconstruction (down 1.82%), Sadbhav Engineering (down 0.05%) and IRB Infrastructure Developers (down 2.28%) edged lower. The Cabinet Committee on Economic Affairs (CCEA) today, 31 August 2016, approved a series of initiatives to revive the construction sector. As per the new initiatives, CCEA allowed contractors to move to the new speedier arbitration process, approved release of 75% of the amount in dispute against margin free bank guarantee and provided for a conciliation board comprising of independent subject experts in order to ensure speedy disposal of pending or new cases.
Item-rate contracts, may be substituted by engineering, procurement, and construction (turnkey) contracts, and PSUs/departments may adopt the model EPC contracts for construction works. The Department of Financial Services, in consultation with Reserve Bank of India, may evolve a suitable one-time scheme for addressing stressed bank loans in the construction sector, the government said in a statement.
These initiatives are expected to help in improving the liquidity in the short run and reform the contracting regime in the long run. Given the significant multiplier effect the construction sector has on the economy, these measures are expected to give a major boost to economic growth. As the sector provides the largest segment of direct and indirect employment, the revival of the sector would also help in significant employment generation, according to the government statement
Tata Motors rose 1.82% to Rs 537.90 on reports that the company is overhauling its domestic supply chain, product portfolio and organisational structure as part of a three-year strategy to turnaround domestic business. The stock hit a high of Rs 548.15 in intraday trade, which is a 52-week high for the counter. Tata Motors Chief Executive Officer & Managing Director Guenter Butschek was quoted as saying that the company is aiming to be among the top three car brands in India by year ended 31 March 2019 (FY 2019), from being in the fifth position in FY 2016. The company is rationalising the number of suppliers and will eliminate those that do not meet its standards on quality, cost and timely delivery, Butschek said according to reports.
Butschek who is at the helm of all operations of Tata Motors in India, South Korea, Thailand, Indonesia and South Africa was quoted as saying that Tata Motors has completed a study of its passenger vehicles business and will consider phasing out models that are not performing well. Butschek further said that company will launch products with new technologies and a focus on safety, low emissions and fuel economy, according to reports.
Surya Roshni rose 1.09% after media reports suggested that two private equity firms have evinced interest in buying the Indian company's lighting business. According to a media reports, Warburg Pincus and Bain Capital have expressed interest to buy into the lighting business of Surya Roshni, as the New Delhi-headquartered company is demerging it into a standalone unit. The private equity acquirers could shell about $400 million for the acquisition of the business, as per reports.
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