Key benchmark indices logged decent gains in what was a volatile session of trade as upbeat European stocks boosted sentiment on the domestic bourses. The barometer index, the S&P BSE Sensex rose 126.93 points or 0.46% to settle at 27,942.11. The Nifty 50 index gained 45.50 points or 0.53% to settle at 8,565. The Sensex hit its highest closing level in almost eleven months. The Nifty hit its highest closing level in more than eleven months. The Sensex gained for the fourth straight trading session. After trading in flat-to-negative zone for first half of the day, key indices edged higher in second half.
The Sensex rose 126.93 points or 0.46% to settle at 27,942.11, its highest closing level since 14 August 2015. The index gained 152.59 points or 0.55% at the day's high of 27,967.77. The index fell 52.03 points or 0.19% at the day's low of 27,763.15.
The Nifty rose 45.50 points or 0.53% to settle at 8,565, its highest closing level since 6 August 2015. The index gained 51.90 points or 0.61% at the day's high of 8,571.40. The index fell 18.80 points or 0.22% at the day's low of 8,500.70.
Among sectoral indices on BSE, the S&P BSE Realty index (down 0.16%), the S&P BSE FMCG index (up 0.42%), the S&P BSE Metal index (up 0.31%), the S&P BSE Energy index (up 0.13%), the S&P BSE Teck index (up 0.04%), the S&P BSE Oil & Gas index (up 0.27%), the S&P BSE IT index (down 0.17%), and the S&P BSE Healthcare index (down 0.28%) underperformed the Sensex.
The S&P BSE Bankex (up 1.48%), the S&P BSE Consumer Durables index (up 2.16%), the S&P BSE Basic Materials index (up 0.88%), the S&P BSE Finance index (up 1.06%), the S&P BSE Auto index (up 0.55%), the S&P BSE Industrials index (up 0.86%), the S&P BSE Capital Goods index (up 1.01%), the S&P BSE Power index (up 0.75%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.81%), the S&P BSE Utilities index (up 0.65%), and the S&P BSE Telecom index (up 0.69%) outperformed the Sensex.
The market breadth indicating the overall health of the market was positive. On BSE, 1,587 shares rose and 1,100 shares declined. A total of 186 shares were unchanged. The BSE Mid-Cap index rose 0.54%. The BSE Small-Cap index gained 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.
In overseas stock markets, most European stocks gained after the Bank of England kept interest rates unchanged today, 14 July 2016, wrong-footing many investors who had expected the first cut in more than seven years as Britain's economy reels from last month's Brexit vote. The Bank said it was likely to deliver stimulus in three weeks' time, possibly as a "package of measures" once it has assessed how the 23 June referendum decision by UK to leave the European Union has affected the economy. In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August. UK's FTSE 100 reversed gains after BOE's decision. The BOE's policy decision was announced after the close of Indian stock markets. In the UK, Theresa May became the country's prime minister after former leader David Cameron tendered his resignation to the Queen. Earlier, most Asian markets rose ahead of Bank of England's interest rate decision.
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 139 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.
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.
Shares of IT major Tata Consultancy Services (TCS) gained 1.16%. The company's consolidated net profit as per International Financial Reporting Standards (IFRS) fell 0.4% to Rs 6317 crore on 3% rise in revenue to Rs 29305 crore in Q1 June 2016 over Q4 March 2016. Operating income fell 0.9% to Rs 7347 crore in Q1 June 2016 over Q4 March 2016. The result was announced after market hours today, 14 July 2016. TCS declared an interim dividend of Rs 6.50 per share for the year ending 31 March 2017 (FY 2017).
Commenting on the Q1 performance, N Chandrasekaran, CEO and MD, TCS, said that strong execution and accelerating customer adoption of cloud, big data & analytics has driven broad-based growth across key markets and industries. The company's investments in platforms are gaining significant traction as customers look to boost business agility and enhance their time-to-market advantage to gain a competitive edge, he added.
Rajesh Gopinathan, Chief Financial Officer, TCS, said this has been a quarter of good financial performance balancing revenue growth, profitability and cash generation. The company's disciplined approach to operations have helped counter strong headwinds in the form of annual salary hikes and promotions as well as global currency and market volatility through the quarter. The company continues to invest in people, platforms and products as it looks to strengthen competitive position across key markets, he added.
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 at around 9:15 IST 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.
Maruti Suzuki India rose 1.44% as the Japanese yen weakened against the dollar. A weak yen lifts Maruti's operating profit margin. Maruti pays royalty to its Japanese parent Suzuki Motor Corporation in yen terms for some of its earlier models. Maruti has reportedly started paying royalty to its Japanese parent in rupee terms on all new models from 1 April 2016. Maruti also has an exposure to the yen to the extent it imports raw materials from Japan.
Mahindra & Mahindra (M&M) fell 1.26% on reports that a foreign brokerage has downgraded the stock to neutral from buy citing expensive valuations. The foreign brokerage reportedly said that M&M's stock valuations are pricing in strong growth in tractors segment. The brokerage expects the company's tractor volumes to recover after two-year gap. The brokerage said that M&M's utility vehicle segment is facing strong competition. Meanwhile, M&M after market hours yesterday, 13 July 2016, announced the incorporation of subsidiary company in the name of Merakisan to carry on the business of procuring and marketing agricultural produce including fruits and vegetables. Merakisan was incorporated as a wholly owned subsidiary of Mahindra Univeg (MUPL) which is a step-down subsidiary of M&M.
NBCC (India) rose 4.77% to Rs 240.75 after the Cabinet Committee on Economic Affairs approved disinvestment of 15% paid up equity of the company out of Government of India's 90% shareholding. The announcement was made after trading hours yesterday, 13 July 2016. The NBCC (India) stock slumped 10.72% to settle at Rs 229.80 yesterday, 13 July 2016, as investors awaited details regarding the quantum of the stake sale after media reports suggested that the government had approved divestment in the state-run firm. The divestment of stake will be carried out through the offer for sale (OFS) route via the stock exchanges mechanism. In order to inculcate a sense of belongingness amongst the employees of NBCC, GoI has decided to allot additional shares to the eligible and willing employees of the company at a discount of 5% to the issue/discovered (lowest cut off) price of the OFS. NBCC (India) is engaged in construction, engineering and project management consultancy services. The Government of India currently holds 90% stake in NBCC (India) (as per shareholding pattern as on 31 March 2016).
Power Finance Corporation surged 4.66% after the company's board at its meeting held today, 14 July 2016, recommended a liberal 1:1 bonus issue of shares to the shareholders. The announcement was made during market hours today, 14 July 2016.
The Sensex gained for the fourth day in a row today, 14 July 2016. The Sensex has risen 815.21 points or 3% in four sessions, from a close of 27,126.90 on 8 July 2016. The Sensex has risen 942.39 points or 3.49% in this month so far (till 14 July 2016). The Sensex has risen 1,824.57 points or 6.98% in calendar year 2016 so far (till 14 July 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 5,447.50 points or 24.21%. The Sensex is off 636.22 points or 2.22% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 2,082.63 points or 6.93% from a record high of 30,024.74 hit on 4 March 2015.
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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