Firmness continued on the bourses as the two key benchmark indices traded near the day's high in mid-morning trade. At 11:15 IST, the barometer index, the S&P BSE Sensex, was up 456.50 points or 1.68% at 27,583.40. The gains for the Nifty 50 index were lower than those for the Sensex in percentage terms. The Nifty was currently up 130.25 points or 1.56% at 8,453.45. Gains in Asian stocks aided the upmove on the domestic bourses.
Asian stocks edged higher as stronger-than-expected US jobs report suggested that the US economic recovery was back on track. The Fed funds futures market data showed that investors are not pricing in a rate increase from the US Federal Reserve in calendar year 2016 despite the strong jobs report for June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015. A delay in interest rate increases from the Fed would slow capital flight from emerging markets.
The Sensex jumped 485.96 points or 1.79% at the day's high of 27,612.86 in mid-morning trade, its highest level since 26 October 2015. The barometer index rose 231.33 points or 0.85% at the day's low of 27,358.23 in opening trade. The Nifty jumped 138.95 points or 1.67% at the day's high of 8,462.15 in mid-morning trade, its highest level since 20 August 2015. The index rose 83.85 points or 1.01% at the day's low of 8,407.05 at onset of trading session.
In overseas stock markets, Asian stocks edged higher as stronger-than-expected US jobs report suggested that the US economic recovery was back on track. The Fed funds futures market data showed that investors are not pricing in a rate increase from the US Federal Reserve in calendar year 2016 despite the strong jobs report for June 2016. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015. A delay in interest rate increases from the Fed would slow capital flight from emerging markets. Japanese stocks surged as investors saw poll results for Japan's upper house as signaling new rounds of economic and political reforms by the coalition government led by Prime Minister Shinzo Abe. The Nikkei 225 Average was currently up 4.42%. In the upper house elections held yesterday, 10 July 2016, Abe's ruling coalition led by his Liberal Democratic Party won a landslide victory, making it far easier for Abe to push through his economic agenda dubbed Abenomics.
US stocks edged higher during the previous trading session on Friday, 8 July 2016, as strong June employment report bolstered investor sentiment on the strength of the economy. US employers in June added a seasonally adjusted 287,000 jobs, the strongest month of hiring since last October, according to the Labor Department report. That was a sharp rebound from May, when hiring sagged to 11,000, the weakest reading since the economy stopped shedding jobs in 2010. The unemployment rate rose to 4.9% from 4.7%, suggesting that more people entered the labor force, given the better-than-expected headline number.
Closer home, the broad market depicted strength. There were more than two gainers against every loser on BSE. 1,673 shares gained and 612 shares declined. A total of 123 shares were unchanged. The BSE Mid-Cap index was currently up 1.34%. The BSE Small-Cap index was currently up 1.03%. Both these indices underperformed the Sensex.
Auto stocks gained. Maruti Suzuki India (up 2.57%), Mahindra & Mahindra (M&M) (up 1.51%), Eicher Motors (up 0.46%), Bajaj Auto (up 1.09%), Hero MotoCorp (up 2.3%) and TVS Motor Company (up 0.64%) rose. Ashok Leyland fell 0.05%.
Tata Motors surged 3.93% after the company reported a 21% rise in its global wholesales at 92,551 units in June 2016 over June 2015. The company announced the sales volume data after market hours on Friday, 8 July 2016. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range rose 5% to 32,720 units in June 2016 over June 2015. Global wholesales of all passenger vehicles surged 31% to 59,831 units in June 2016 over June 2015.
Power generation stocks rose on renewed buying. Reliance Infrastructure (up 2.03%), Tata Power Company (up 0.89%), CESC (up 0.62%), NTPC (up 2.74%), Torrent Power (up 1.69%), Reliance Power (up 1.15%), NHPC (up 0.8%) and Adani Power (up 1.37%) gained. Jaiprakash Power Ventures (down 0.68%) and JSW Energy (down 1.79%) edged lower.
Shares of state-run power transmission major Power Grid Corporation of India gained 2.91%.
Shares of state-run power sector finance firms also moved higher. Power Finance Corporation was up 4% at Rs 202.30. Rural Electrification Corporation was up 2.9% at Rs 193.65.
State-run coal-mining giant Coal India was up 1.54% at Rs 316.45. The stock hit a high of Rs 318.60 and a low of Rs 314.85 so far during the day.
United Spirits (USL) rose 1.1% after the company said that almost all the amounts identified in an additional inquiry into historical transactions concerning USL and its subsidiaries have been already provided for or expensed in the financial statements of USL or its subsidiaries for prior periods. USL said additional enquiries revealed fund diversions and improper transactions amounting to a total Rs 1225.30 crore in USL's books for the period from October 2010 to July 2014. After a mutually agreed transaction, Diageo gained control of United Spirits from Vijay Mallya's UB Group in July 2013. USL said that the company's management has recommended to the company's board of directors for USL to make a further provision of Rs 21.70 crore for the value of certain improper transactions identified by the additional inquiry which have not been previously expensed or provided for in USL's books.
Nila Infrastructures surged 5.34% after the company said it has received a work order worth about Rs 6.80 crore from Ahmedabad Municipal Corporation. The project envisages rehabilitating about 80 slum-dwelling families living at Sabarmati, Kailashnagar, Ahmedabad. The project will be redeveloped in 18 months at a total development cost of about Rs 6.80 crore. As consideration, Nila Infrastructures will get the balance vacant land admeasuring about 2,793 sq. meters on additional payment of an estimated premium of Rs 1.01 crore, the company said in a statement. The announcement was made after market hours on Friday, 8 July 2016.
Meanwhile, as per the monthly data released by the Association of Mutual Funds in India (AMFI), equity mutual fund schemes including tax saving equity schemes known as Equity Linked Saving Schemes (ELSS) received net inflow of Rs 320 crore in June 2016. The inflow would have been much higher if one excludes large redemption of arbitrage funds. Media reports suggest that there was redemption of Rs 3500 crore from arbitrage funds in June 2016. AMFI does not give separate data on arbitrage funds. It clubs arbitrage funds under the equity fund category. Meanwhile, balanced funds received net inflow of Rs 2402 crore in June 2016. Balanced funds typically have 65-70% of their portfolio invested in equities and 30-35% in debt.
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