Optimism over the progress of key legislation in parliament and gains in European stocks triggered rally on the domestic bourses. The barometer index, the S&P BSE Sensex, rose 460.36 points or 1.82% to settle at 25,688.86. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty gained 132.60 points or 1.71% to settle at 7,866.05. The Sensex, and the Nifty, both, hit their highest closing level in almost two weeks.
The latest rally on the domestic bourses was triggered by optimism over the progress of key legislation in parliament after the the Lok Sabha, last week, passed a key economic bill viz. the Insolvency and Bankruptcy Code, 2015. Once the bill becomes a law, it will help creditors recover bad debt faster. The bankruptcy bill aims to provide single unified law for timely resolution of insolvency and bankruptcy related cases in India. The Lok Sabha passed the Insolvency and Bankruptcy Code, 2015 on 5 May 2016. The bill will now go to the Rajya Sabha for its passage.
The focus now shifts to another key economic bill pending for its passage in Rajya Sabha viz. the Goods and Services Tax (GST) bill. The constitutional amendment bill for the implementation of GST, which subsumes all indirect taxes to create a unified market across the country, has been cleared by the Lok Sabha and is awaiting legislative passage in the Rajya Sabha. For the bill to become a law, the GST bill also needs to be approved by half the state assemblies.
In overseas stock markets, European stocks extended intraday gains after the latest data showed German manufacturing orders rebounded sharply in March 2016.
Bank stocks gained across the board in the wake of the passage of the passage of the Insolvency and Bankruptcy Code, 2015 in the Lok Sabha. Shares of oil exploration and production companies rose as global crude oil prices gained. Stocks of public sector oil marketing companies (PSU OMCs) declined as global crude oil prices gained. Shares of diagnostic chain operator Thyrocare Technologies surged on its debut.
Index heavyweight and cigarette maker ITC rose after the company's announcement that manufacturing of cigarettes at its factories will commence progressively. FMCG major Hindustan Unilever (HUL) edged lower in choppy trade after the company reported tepid volume growth in its domestic consumer business in Q4 March 2016. Tata Motors rose after the company's British luxury car making unit Jaguar Land Rover reported 11% growth in retail sales in April 2016 over April 2015.
Grasim Industries rose after the company announced strong Q4 results. UltraTech Cement gained after the company announced that its board of directors approved a proposal for increase in investment limits by registered foreign portfolio investors (RFPIs) including foreign institutional investors (FIIs) from the existing 24% of the paid-up equity share capital to 30%.
In overseas stock markets, European stocks extended initial gains after the latest data showed German manufacturing orders rebounded sharply in March 2016. Total orders for Germany's important manufacturing sector--adjusted for seasonal swings and calendar effects--jumped 1.9% in March from the month before. Increase in foreign orders led the gains. Domestic orders, however, dropped 1.2% in March from the preceding month. The German economy is Europe's biggest economy.
Earlier during the global day, Asian stocks ended on a mixed note. Stocks fell in mainland China after the latest data showed that China's exports and imports fell more than expected in April, underlining weak demand at home and abroad. The Shanghai Composite ended 2.79% lower. In Hong Kong, the Hang Seng index settled 0.23% higher. China's exports declined 1.8% in April in dollar terms, reversing an increase of 11.5% the previous month, the General Administration of Customs said yesterday, 8 May 2016. Imports in April fell by a sharper-than-expected 10.9% from a year earlier, compared with a 7.6% drop in March.
US stocks posted modest gains on Friday, 6 May 2016, as a weaker-than-expected April job report fanned expectations that the Federal Reserve will delay raising interest rates. US non-farm payrolls increased by 160,000 in April, the smallest gain since September, and below market expectations. The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 14-15 June 2016.
The Sensex rose 460.36 points or 1.82% to settle at 25,688.86, its highest closing level since 27 April 2016. The index jumped 481.18 points or 1.9% at the day's high of 25,709.68. The index rose 74.36 points or 0.29% at the day's low of 25,302.86.
The Nifty rose 132.60 points or 1.71% to settle at 7,866.05, its highest closing level since 27 April 2016. The index gained 140.20 points or 1.81% at the day's high of 7,873.65. The index rose 20.10 points or 0.25% at the day's low of 7,753.55.
The BSE Mid-Cap index rose 1.25%. The BSE Small-Cap index rose 1.2%. Both these indices underperformed the Sensex.
The market breadth indicating the overall health of the market was strong. On BSE, 1,673 shares rose and 970 shares declined. A total of 164 shares were unchanged.
Total turnover on BSE amounted to Rs 2262 crore, higher than turnover of Rs 1990.71 crore registered during the previous trading session.
All the nineteen sectoral indices on BSE registered gains. The S&P BSE Finance index (up 2.35%), the BSE Bankex index (up 2.45%) and the BSE Capital Goods index (up 1.86%) outperformed the Sensex. The BSE FMCG index (up 1.15%), the BSE IT index (up 1.29%), the BSE Telecom index (up 1.8%), the BSE Auto index (up 1.6%), and the BSE Realty index (up 1.74%) underperformed the Sensex.
Bank stocks gained across the board in the wake of the passage of the passage of the Insolvency and Bankruptcy Code, 2015 in the Lok Sabha. Among public sector banks, Punjab National Bank (up 2.29%), Bank of Baroda (up 3.09%), State Bank of India (SBI) (up 2.3%), Union Bank of India (up 3.79%), Canara Bank (up 2.54%), IDBI Bank (up 2.44%), Syndicate Bank (up 3.81%) and Bank of India (up 2.88%) edged higher.
Among private sector banks, Axis Bank (up 3.41%), ICICI Bank (up 3.28%), Kotak Mahindra Bank (up 1.4%), Yes Bank (up 3.94%) and IndusInd Bank (up 1.32%) edged higher.
Index heavyweight HDFC Bank rose 1.89% at Rs 1,141.85. The stock hit a high of Rs 1,144.80 and a low of Rs 1,110.05 in intraday trade.
The Lok Sabha, last week, passed the Insolvency and Bankruptcy Code, 2015. Once the bill becomes a law, it will help creditors recover bad debt faster. The bankruptcy bill aims to provide single unified law for timely resolution of insolvency and bankruptcy related cases in India. The bill will now go to the Rajya Sabha for its passage.
Meanwhile, the Reserve Bank of India (RBI) has announced open market operations of government securities for an aggregate amount of Rs 10000 crore on 10 May 2016 through multi-security auction using the multiple price method.
Auto stocks gained on renewed buying. Bajaj Auto (up 3.78%), Hero MotoCorp (up 2.19%), Mahindra & Mahindra (up 1.63%), Eicher Motors (up 1.4%), Maruti Suzuki India (up 0.96%), Ashok Leyland (up 0.82%) and TVS Motor Company (up 0.33%) rose.
Tata Motors rose after the company's British luxury car making unit Jaguar Land Rover reported 11% growth in retail sales to 41,341 vehicles in April 2016 over April 2015. The stock rose 1.17% at Rs 403.35. Sales of the Land Rover brand rose 4% to 33,348 units in April 2016 over April 2015. Sales of the Jaguar brand jumped 49% to 7,993 units in April 2016 over April 2015.
Capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 0.39%), ABB India (up 0.73%), Bharat Electronics (up 1.01%), L&T (up 2.72%), Thermax (up 1.31%) and Crompton Greaves (up 1.79%) gained. Havells India (down 0.26%) edged lower.
Siemens rose 0.1% at Rs 1,176.55 after net profit rose 9.61% to Rs 177.42 crore on 4.76% increase in total income to Rs 2810.59 crore in Q2 March 2016 over Q2 March 2015. The result was announced after market hours on Friday, 6 May 2016. Siemens' net profit before exceptional items rose 13.7% on year-on-year basis in Q2 March 2016. The company's order inflow rose 10.5% to Rs 2939 crore in Q2 March 2016 over Q2 March 2015.
The company announced that it has received shareholders' approval for the sale and transfer of its healthcare undertaking as a going concern to Siemens Healthcare, a subsidiary of its parent Siemens AG, effective from 1 July 2016.
Shares of oil exploration and production companies rose as global crude oil prices gained. Oil India (up 1.23%), ONGC (up 1.58%) and Cairn India (up 0.04%) gained. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms.
Index heavyweight Reliance Industries (RIL) rose 1.42% to Rs 982.95. The stock hit high of Rs 986 and low of Rs 972.50 in intraday trade.
Stocks of public sector oil marketing companies (PSU OMCs) declined as global crude oil prices gained. BPCL (down 0.11%) and HPCL (down 0.94%) edged lower. Indian Oil Corporation (up 0.66%) edged higher. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
In global commodities markets, Brent crude oil futures edged higher as the ongoing wildfire near the hub of Canada's oil sands triggered expectations that the disaster could help ease the global oil supply glut. Brent for July settlement was currently up 69 cents at $46.06 a barrel. The contract had risen 36 cents or 0.79% to settle at $45.37 a barrel during the previous trading session.
Index heavyweight and housing finance major HDFC rose 3.12% at Rs 1,204. The company during market hours today, 9 May 2016, announced that it intends to raise Rs 500 crore through issue of secured redeemable non-convertible debentures on private placement basis. The tenor of the debentures is 5 years. Each debenture of the face value of Rs 1 crore carries redemption premium of about Rs 49.70 lakh. The effective yield on the debentures works out to 8.4% per annum. The coupon rate is zero. The issue opens and closes on the same day tomorrow, 10 May 2016. The object of the issue is to augment the long-term resources of the company. The proceeds of the issue would be utilized for financing/refinancing the housing finance business requirements of the company, HDFC said.
Index heavyweight and software major Infosys rose 1.5% at Rs 1,199.15. The stock hit a high of Rs 1,200.50 and a low of Rs 1,181.55 in intraday trade.
Index heavyweight and cigarette maker ITC rose after the company yesterday, 8 May 2016, announced that the manufacturing of cigarettes at its factories will commence progressively. The stock rose 2.38% at Rs 324.75. The company had 4 May 2016 announced temporary closure of its cigarette factories until it is in a position to comply with the rules on pictorial warnings on cigarette packs. While passing an order on 4 May 2016 transferring all writ petitions pending in various courts challenging the rules prescribing 85% pictorial warnings on cigarette packs to the Karnataka High Court, the Supreme Court said at that time all parties should endeavour to follow the existing rules on pictorial warnings on cigarette packs. The government had notified that cigarette companies have to carry warning over 85% of the pack from 1 April 2016, sharply higher than earlier 40% of the pack.
FMCG major Hindustan Unilever (HUL) edged lower in choppy trade after the company reported tepid volume growth in its domestic consumer business in Q4 March 2016. The stock dropped 0.8% at Rs 846.10. The stock hit high of Rs 869 and low of Rs 840.25 in intraday trade. The company's net profit rose 7.02% to Rs 1089.59 crore on 3.26% rise in total income to Rs 8027.91 crore in Q4 March 2016 over Q4 March 2015. The rate of growth in net profit in Q4 March 2016 was adversely impacted by base effect. HUL said it had booked higher exceptional income in Q4 March 2015 from the sale of subsidiary. Net profit before exceptional items rose 13% to Rs 1031 crore in Q4 March 2016 over Q4 March 2015.
HUL said net sales of its domestic consumer business grew 3.6% on year on year basis in Q4 March 2016. The growth rate was adversely impacted due to phasing out of excise duty incentives, a one-time credit for excise duty refund in Q4 March 2015 and marginal price degrowth. Volume growth stood at 4% on year on year basis in Q4 March 2016.
Grasim Industries rose after the company announced strong Q4 results. The stock rose 1.07% at Rs 4,144.20. The company's consolidated net profit rose 37.38% to Rs 696.09 crore on 13.69% rise in net sales to Rs 9896.43 crore in Q4 March 2016 over Q4 March 2015. The result was announced on Saturday, 7 May 2016. Grasim Industries' earnings before interest, taxes, depreciation and amortization (EBITDA) rose 24.19% to Rs 2059 crore in Q4 March 2016 over Q4 March 2015. Grasim Industries said it has posted impressive results led by robust volume growth in all its businesses viz. viscose staple fibre (VSF), chemical and cement. During the year, under a court approved scheme of amalgamation, Aditya Birla Chemicals (India) (ABCIL), has been amalgamated with the company from the appointed date of 1 April 2015. In view of amalgamation of ABCIL with the company, the results for the quarter and the year ended 31 March 2016 are not strictly comparable with corresponding periods of the previous year.
With regard to the future outlook for the VSF business, Grasim said that VSF capacity addition has slowed down globally. Further, cotton production is projected to be lower than the consumption in the 2015-16 season with reduced acreage and unfavorable climate. As a result, the price volatility of VSF is expected to reduce. The company will continue to focus on expanding VSF market in India by partnering with the textile value chain and better customer connect through its Liva brand. Enhancing product mix through larger share of specialty fibre will be yet another focus area.
With regard to the future business outlook for the caustic soda business, Grasim said that the caustic soda demand in India is expected to grow with increase in demand from the end user industry. To meet the growing demand, Grasim is expanding its caustic soda capacity by 100,000 tonnes per annum through debottlenecking at different units. With regard to the future business outlook for the cement business, Grasim said that cement demand is expected to grow at 7%-8% in the year ending 31 March 2017, driven by the government's focus on infrastructure development, housing, smart cities etc. The company is well positioned across the country to cater the growth in demand.
Grasim has exposure to the cement sector through its holding in UltraTech Cement.
UltraTech Cement gained after the company announced that its board of directors approved a proposal for increase in investment limits by registered foreign portfolio investors (RFPIs) including foreign institutional investors (FIIs) from the existing 24% of the paid-up equity share capital to 30%. The stock rose 1.62% at Rs 3,151. The increase in the limits is subject to the approval of the shareholders at the ensuing Annual General Meeting of the company to be held in July 2016, the date of which will be intimated separately. The announcement was made during market hours today, 9 May 2016.
Titan Company rose 0.41% at Rs 365.60. The stock was volatile. The stock hit a high of Rs 369.65 and a low of Rs 352.05 in intraday trade. The company's net profit declined 14.40% to Rs 184.11 crore on 1.51% decline in net sales to Rs 2437.15 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours on Friday, 6 May 2016. Titan said in a statement that Q4 March 2016 and the year ended March 2016 was an extremely challenging one for the company. The challenges faced were both on account of weak market conditions for all businesses and new regulatory restrictions for the jewellery business. The performance came in the backdrop of an environment where the consumer sentiment did not pick up as expected. The strength of the company's brands was tested in an environment of subdued sales across all retail formats of the company as well as related categories. Weak consumer sentiment had an impact on retail sales across all businesses, the company said.
Titan Company also said that its board of directors approved acquisition of majority stake in Chennai-based Carat Lane Trading, a leading online jewellery brand. It sells its products through its website Caratlane.com. Carat Lane has also developed omni-channel capabilities and has currently 13 stores across the country with plans to ramp up the retail stores significantly in the future. The financial details of the acquisition will be furnished after the conclusion of the accounting due diligence of the target. The acquisition is expected to be completed on or before mid June 2016. Mr. Bhaskar Bhat, Managing Director of the Company stated that for Titan, the acquisition brings significant capabilities in the e-commerce space along with a brand, a customer segment and an exciting business model.
Reliance Capital surged 6.79% at Rs 409.60 after consolidated net profit rose 2% to Rs 415 crore on 11.2% growth in total income to Rs 2828 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours on Friday, 6 May 2016. Reliance Capital said that net profit, prior to one-off creation of reserves in Reliance Life Insurance, rose 29% to Rs 526 crore in Q4 March 2016 over Q4 March 2015.
Shares of diagnostic chain operator Thyrocare Technologies surged on its debut. The stock settled at Rs 618.10 on BSE, a premium of 38.58% over the initial public offer (IPO) price of Rs 446. The stock debuted at Rs 662, a premium of 48.43% to the IPO price. The stock hit a high of Rs 665.40 and low of Rs 606 in intraday trade.
The Sensex has risen 82.24 points or 0.32% in this month so far (till 9 May 2016). The Sensex has fallen 428.68 points or 1.64% in calendar year 2016 so far (till 9 May 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 3,194.25 points or 14.2%. The Sensex is off 2,889.47 points or 10.11% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 4,335.88 points or 14.44% from a record high of 30,024.74 hit on 4 March 2015.
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