Key benchmark indices logged decent gains in what was a volatile session of trade. The barometer index, the S&P BSE Sensex rose 127.90 points or 0.46% at 27,943.08, as per the provisional closing data. The Nifty 50 index rose 45.50 points or 0.53% at 8,565, as per the provisional closing data. The Sensex hit its highest level in nearly 11 months. The Nifty hit its highest level in more than eleven months. After trading in flat-to-negative zone for first half of the day, key indices edged higher in second half. Upbeat European stocks ahead of Bank of England's interest rate decision later in the global day boosted sentiment on the domestic bourses.
The Sensex gained 152.59 points or 0.55% at the day's high of 27,967.77 in late trade, its highest level since 19 August 2015. The barometer index fell 52.03 points or 0.19% at the day's low of 27,763.15 in morning trade. The Nifty gained 51.90 points or 0.61% at the day's high of 8,571.40 in late trade, its highest level since 10 August 2015. The index fell 18.80 points or 0.22% at the day's low of 8,500.70 in morning trade.
In overseas stock markets, European stocks gained and most Asian markets rose ahead of Bank of England's interest rate decision later in the global day. The Bank of England meets later in the global day today, 14 July 2016, and expectations are that it will lower its benchmark lending rate by a quarter of a percentage point to 0.25% to counter the fallout from the Brexit vote. In the UK, Theresa May became the country's prime minister after former leader David Cameron tendered his resignation to the Queen.
Trading in US stock index futures indicated gains for US stocks at the opening bell. Trading in US index futures indicated that the Dow Jones Industrial Average could rise 130 points at the opening bell. The S&P 500 and Dow Jones Industrial Average scored meager gains yesterday, 13 July 2016 but enough to extend their run into record territory and advance for a fourth session in a row. However, the tech-heavy Nasdaq Composite index took a breather following a five-session climb to end lower. Stocks got a slight bump from the US Fed's beige book report released yesterday, 13 July 2016 which indicated that the US economy is holding steady although consumption may be softening. The beige book is an anecdotal survey of economic conditions in the US compiled by the Fed's regional banks.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,580 shares rose and 1,113 shares declined. A total of 180 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.54%. The BSE Small-Cap index was provisionally up 0.73%. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 3077 crore, lower than turnover of Rs 3941.25 crore registered during the previous trading session.
Index heavyweight and cigarette major ITC rose 1.42% to Rs 250.50. The stock hit a high of Rs 251.35 and low of Rs 245.15 in intraday trade.
Index heavyweight and software major Infosys lost 1.6% to Rs 1,174.05. The stock hit high of Rs 1,195.05 and low of Rs 1,165.20 in intraday trade. Infosys is scheduled to announce its Q1 June 2016 results tomorrow, 15 July 2016.
Bank stocks gained. Among private sector banks, Axis Bank (up 0.83%), ICICI Bank (up 2.51%), HDFC Bank (up 0.33%), Yes Bank (up 1.63%), and IndusInd Bank (up 0.76%) edged higher.
Kotak Mahindra Bank shed 0.26%. The stock turned ex-dividend today, 14 July 2016, for dividend of Rs 0.50 per share for the year ended 31 March 2016 (FY 2016).
Public sector banks rose on reports that the government is working with insurance and banking regulators to ease the stringent norms for banks for raising capital through additional Tier I bonds.
Punjab National Bank (up 6.6%), Bank of Baroda (up 2.5%), State Bank of India (SBI) (up 1.76%), IDBI Bank (down 2.36%), Andhra Bank (up 3.04%), Union Bank of India (up 4.18%), Canara Bank (up 6.29%), and Bank of India (up 3.84%) edged higher.
The proposal of easing stringent norms for banks for raising capital through additional Tier I (AT1) bonds was discussed in the recent meeting of regulators viz. the Financial Stability Development Council (FSDC), according to reports. Some protection on investment made by insurers in banks' AT1 is being mulled, reports suggest. According to reports, the Insurance Regulatory and Development Authority of India (IRDAI) is not convinced that insurers should be participating in AT1 bonds given these bonds are perpetual in nature and the bank can write off such investments in time of stress.
Meanwhile, media reports also suggested that the government has finalised plan for allocating around Rs 15000 crore to 12 public sector banks in the first tranche during the current financial year. The remainder will be disbursed based on the performance of these lenders, according to reports. The government has set aside Rs 25000 crore for recapitalization of PSU banks for the current financial year.
On the macro front, data released by the government today, 14 July 2016 showed that the inflation based on wholesale price index (WPI), rose to 1.62% (provisional) in June 2016 as compared to 0.79% (provisional) in May 2016 and -2.13% in June 2015. WPI for April 2016 was revised higher to 0.79% from 0.34% reported earlier. Build up inflation rate in the financial year so far was 3.82% compared to a build up rate of 1.70% in the corresponding period of the previous year.
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