A rangebound trading was witnessed as key benchmark indices hovered in positive zone in mid-morning trade. At 11:16 IST, the barometer index, the S&P BSE Sensex, was up 177.88 points or 0.67% at 26,845.84. The Nifty 50 index was currently up 50.25 points or 0.62% at 8,210.35. Data showing acceleration in growth in India's gross domestic product in Q4 March 2016, a sharp pick up in growth in core sector in April 2016 and fiscal deficit meeting the target for fiscal year 2015-16 aided the upmove on the bourses.
The Sensex rose 189.29 points or 0.7% at the day's high of 26,857.25 in morning trade, its highest level since 30 October 2015. The barometer index rose 3.90 points or 0.01% at the day's low of 26,671.86 in early trade. The Nifty rose 55.25 points or 0.67% at the day's high of 8,215.35 in morning trade, its highest level since 27 October 2015. The index rose 13.65 points or 0.16% at the day's low of 8,173.75 in early trade.
On the macro front, the latest data showed that India's gross domestic product (GDP) growth accelerated to 7.9% in Q4 March 2016 compared with a revised reading of a growth of 7.2% in Q3 December 2015. For the fiscal year 2015-16, GDP grew 7.6%, which was higher than 7.2% growth recorded in 2014-15. The government released the GDP data after market hours yesterday, 31 May 2016. Another data released by the government after market hours yesterday, 31 May 2016, showed the output of eight core infrastructure industries carrying 38% of the weight in the Index of Industrial Production (IIP) increased at 18-months high pace of 8.5% in April 2016.
Meanwhile, the finance ministry said that as per the provisional accounts for 2015-16, the fiscal deficit in 2015-16 stands at 3.9% of GDP, meeting the target set by the government. This is a significant improvement over the fiscal deficit of 4.1% in 2014-15 and 4.7% in 2013-14. Revenue deficit has also shown significant improvement due to a sharp increase in capital expenditure of the central government. Revenue deficit improved to 2.5% of GDP in 2015-16 from 2.9% in 2014-15. There was also an increase in the Plan Expenditure in 2015-16 despite substantial increase in share of tax devolution to the States.
Meanwhile, the outcome of a monthly survey today, 1 June 2016, showed slight expansion in growth in India's manufacturing sector in May 2016. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) edged higher to 50.7 in May from 50.5 in April. The rate of growth in output as well as new orders was well below trend. New export orders fell for the first time in 32 months. Sub-sector data highlighted intermediate goods as the best performing category in May, where growth rates for new orders and output were stronger than those seen among consumer goods producers. Investment goods firms, in contrast, saw further declines in new work and production.
Although firms passed on to their clients part of the additional increase in costs by way of raising selling prices, the rate of charge inflation eased to the weakest in the current three-month sequence of increases despite cost inflation climbing to a 14-month high.
In overseas stock markets, Chinese stocks witnessed a mixed trend after the release of the monthly manufacturing and nonmanufacturing data. In mainland China, the Shanghai Composite index was currently up 0.17%. In Hong Kong, the Hang Seng index was currently down 0.18%. An official measure of China's manufacturing sector held steady in May while a private gauge edged down slightly. China's official purchasing managers' index for manufacturing remained at 50.1 last month, the same level as in April and the third consecutive month the index kept above 50, the line separating expansion from contraction. The competing private Caixin manufacturing PMI index slipped to 49.2 in May from 49.4 in April, the fifteenth consecutive month of contraction. Another data showed that China's official nonmanufacturing PMI fell to 53.1 from 53.5 in April.
US stocks ended mostly lower yesterday, 31 May 2016, as investors turned cautious ahead of key economic reports this week for indications on the pace and timing of the next interest rate hike. The Federal Open Market Committee next undertakes monetary policy review on 14-15 June 2016. The Federal Reserve has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Closer home, the broad market depicted strength. There were nearly two gainers against every loser on BSE. 1,414 shares rose and 743 shares declined. A total of 101 shares were unchanged. The BSE Mid-Cap index was currently up 0.54%, underperforming the Sensex. The BSE Small-Cap index was currently up 0.77%, outperforming the Sensex.
IT stocks were mixed. TCS (up 2.02%), Wipro (up 0.76%) and Tech Mahindra (up 0.29%) edged higher. Persistent Systems (down 0.05%), Oracle Financial Services Software (down 0.46%) and HCL Technologies (down 0.21%) edged lower.
Index heavyweight and software major Infosys rose 1.13% at Rs 1,264. The stock hit a high of Rs 1,267.45 and a low of Rs 1,241 so far during the day.
Shares of public sector oil marketing companies (PSU OMCs) rose after announcing a hike in petrol and diesel prices. BPCL (up 0.51%) and Indian Oil Corporation (up 2.02%) edged higher. HPCL (down 0.01%) edged lower. Petrol price was hiked by Rs 2.58 per litre and diesel price was raised by Rs 2.26 a litre at Delhi (including state levies) with corresponding price revision in other states. After the latest revision, petrol in Delhi costs Rs 65.60 per litre and diesel costs Rs 53.93 a litre. The price hike is effective from the midnight of 31 May 2016.
Shares of oil exploration and production (E&P) firms rose. Cairn India (up 0.21%) edged higher. Oil India (down 0.6%) edged lower.
In the global commodities markets, Brent for August settlement was currently down 37 cents at $49.52 a barrel.
Index heavyweight Reliance Industries was up 0.42% at Rs 962.95. RIL announced that due to lower release of dam water and the significantly increased salinity of water supply to the company's Dahej manufacturing complex in district Bharuch of Gujarat, there is shortage of the right quality of industrial water at Dahej complex. As a response, RIL is running on reduced capacity in some of the plants and has temporarily shut down its PTA and PET plants. RIL has 2.3 MMTPA of PTA capacity and 650 KTPA of PET capacity at its Dahej manufacturing complex. RIL said it has initiated alternative arrangements for water and is closely monitoring the situation. It has also used the current situation to carry out planned maintenance and reliability activities. The company is in a state of readiness to resume full supplies as soon as the water availability and water quality issues are resolved. RIL said it is ensuring a continued supply of PTA to the domestic market from its Hazira and Patalganga manufacturing complexes. The announcement was made after market hours yesterday, 31 May 2016.
ONGC rose 0.64% at Rs 212.50 after the company announced after market hours yesterday, 31 May 2016, that its wholly-owned subsidiary, ONGC Videsh, on 31 May 2016 completed the acquisition of 15% stake in Russia's JSC Vankorneft from Rosneft Oil Company. JSC Vankorneft is a company organized under the law of Russian Federation, which is the owner of Vankor Field and North Vankor license. Rosneft, the national oil company of Russia continues to hold the remaining 85% shares of JSC Vankorneft.
Earlier in September 2015, ONGC Videsh had signed an agreement to acquire not less than 15% shares in JSC Vankorneft for $1268 million.
Vankor is Rosneft's (and Russia's) second largest field by production and accounts for 4% of Russian crude oil production. The daily peak production from the field is around 442,000 barrels of oil per day (bopd). With 15% shareholding, ONGC Videsh's share of daily oil production would be about 66,000 bopd.
The present transaction strengthens ONGC Videsh's presence in Russia and is consistent with its stated strategic objective of adding high quality international assets to its existing exploration & production (E&P) portfolio. This acquisition also has significant strategic importance to India, both in terms of augmentation of India's energy security, as well as adding a new dimension to the relationship between Rosneft and ONGC Videsh besides further strengthening the cooperation between the two countries, the Indian company said.
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