Key benchmark indices further extended gains and hit fresh intraday high in afternoon trade sighting firm start to trade for European stocks. At 12:21 IST, the barometer index, the S&P BSE Sensex, was up 120.61 points or 0.39% at 31,216.31. The Nifty 50 index was up 28.75 points or 0.3% at 9,645.15.
Stocks drifted higher in early trade taking a lead from firm Asian stocks and as retail inflation and industrial output data released after market hours yesterday, 12 June 2017 back home boosted expectations of an interest rate cut by the Reserve Bank of India (RBI) at its next policy meeting in August 2017. Key indices extended gains as the day's trade progressed with higher European stocks further providing support to the bourses.
The S&P BSE Mid-Cap index was up 0.48%. The S&P BSE Small-Cap index was up 0.87%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was strong. On the BSE, 1,491 shares rose and 986 shares fell. A total of 154 shares were unchanged.
Auto stocks gained on rising hopes of a rate cut by the central bank after data showed retail inflation further eased in May. Mahindra & Mahindra (M&M) (up 0.44%), Ashok Leyland (up 2.02%), Maruti Suzuki India (up 0.26%), Eicher Motors (up 0.12%), Bajaj Auto (up 0.6%), and TVS Motor Company (up 1.39%) gained. Hero MotoCorp (down 0.41%) and Tata Motors (down 1.01%) declined. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Shares of most power generation and power distribution companies gained after reports suggested that the government is close to resolving the problem of stressed power assets with genuine issues of finance, fuel or clearances, power, coal, renewable energy and mines. CESC (up 0.45%), Tata Power Company (up 0.25%), Power Grid Corporation of India (up 2.01%), Reliance Infrastructure (up 0.66%) and Reliance Power (up 0.74%) gained. Torrent Power (down 0.27%), Adani Power (down 1.08%), and NHPC (down 1.35%) declined.
Shares of psu coal mining major Coal India declined 0.37%.
TCS lost 0.86% to Rs 2,468.50 as the stock turned ex-dividend today, 13 June 2017, for final dividend of Rs 27.50 per share for the year ended 31 March 2017. Before turning ex-dividend, the stock offered a dividend yield of 1.1% based on the closing price of Rs 2,489.90 yesterday, 12 June 2017.
Meanwhile, TCS announced a new collaboration with Intel Corporation to build a future ready reference architecture for the internet of things (IoT), cloud, network, 5G, AI and data center infrastructure management, helping to meet rapidly evolving digital transformation requirements of global markets. The announcement was made after market hours yesterday, 12 June 2017.
TCS and Intel are also investing in Centre of Excellence (CoE) in the US and India, which will be hubs for next generation datacenter technologies, IoT and cloud-ready network architectures to support customers.
Muthoot Finance rose 1.74% to Rs 456.05 on reports a domestic brokerage has recommended buy on the stock for 2-3 quarters for a target of Rs 506-546.
The domestic brokerage reportedly said that gold loan companies even after the recent run up quote at a discount in terms of price to average book value compared to other categories of non-banking finance companies (NBFCs) like housing finance, personal/durable finance, micro finance. Expectation of good monsoon this year could trigger larger demand for gold loans across the country especially in the south, the brokerage said.
On the macro front, the index of industrial production (IIP) rose by 3.1% in April led by robust growth in electricity generation, data showed yesterday, 12 June 2017. IIP grew by 6.5% in April last year. The CSO also revised upwards the IIP growth figure for March to 3.75% from its provisional estimate of 2.7%. While presenting the March 2017 data, the IIP base year was revised from 2004-05 to 2011-12.
Another data released yesterday, 12 June 2017, showed that retail price inflation, as measured by the consumer price index (CPI), slowed to 2.18% in May from 2.99% in April 2017 as food prices started falling from their year-ago level. Inflation is now well below the Reserve Bank of India's (RBI) medium-term target of 4%, and at the lower end of its CPI projection of 2%-3.5% in the first half of the fiscal year.
Overseas, European and Asian stocks gained defying a weak lead from Wall Street. Major US stock-market benchmarks closed lower yesterday, 12 June 2017 weighed by a second straight session of firm losses in technology shares.
The US Federal Reserve will meet Tuesday and Wednesday, and investors expect the central bank to raise interest rates for the third time since December. Super-low unemployment, gains in factory output and other economic data pointing to a recovery in the US economy have led investors to believe that the Fed will lift rates.
Meanwhile, the Trump administration yesterday, 12 June 2017 proposed a wide-ranging rethinking of the rules governing the US financial sector in a report that makes scores of recommendations that have been on the banking industry's wish list for years.
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