Metal, mining and power sector stocks led gains as key benchmark indices edged higher on the back of favourable macroeconomic data. The barometer index, the S&P BSE Sensex, jumped 246.49 points or 0.96% to settle at 25,856.70. The 50-unit CNX Nifty rose 82.95 points or 1.06% to settle at 7,872.25. The Sensex and the Nifty, both, attained two-week closing high. The latest macroeconomic data showed pick up in industrial production growth, a benign current account deficit and wholesale prices continuing to remain in negative zone.
The latest upmove for Indian stocks comes amid growing expectations that the US Federal Reserve will hold off on raising interest rates at its monetary policy meeting later this week due to concerns about global growth and amid a recent turmoil in global equity markets. Higher US interest rates will drain liquidity from global emerging markets like India and redirect it to developed economies. The Fed's policy-making committee holds a two-day meeting on 16 and 17 September 2015. The Fed has held its benchmark short-term interest rate near zero since December 2008.
Shares of power sector companies and banking stocks gained on media reports that Prime Minister Narendra Modi is set to meet bosses of loss-making state-government run electricity utilities today, 14 September 2015, to debate a rescue package for the power transmission and distribution sector. Shares of steel makers gained on reports that the government will soon notify a 20% import tax on some hot-rolled steel products after a government body found evidence that rising imports from China, Japan, South Korea and Russia pose a threat to the domestic steel industry.
The Sensex jumped 246.49 points or 0.96% to settle at 25,856.70, its highest closing level since 31 August 2015. The index rose 281.52 points at the day's high of 25,891.73 in late trade. The index lost 79.14 points at the day's low of 25,531.07 in early trade.
The Nifty rose 82.95 points or 1.06% to settle at 7,872.25, its highest closing level since 31 August 2015. The Nifty rose 90.65 points at the day's high of 7,879.95 in late trade. The Nifty lost 27.45 points at the day's low of 7,761.85 in early trade.
The market breadth indicating the overall health of the market was strong. On BSE, 1,703 shares rose and 951 shares declined. A total of 107 shares were unchanged.
The BSE Mid-Cap index rose 1.27%, outperforming the Sensex. The BSE Small-Cap index gained 0.8%, underperforming the Sensex.
The total turnover on BSE amounted to Rs 1960 crore, lower than turnover of Rs 2624.52 crore registered during the previous trading session.
Metal and mining stocks gained on renewed buying. National Aluminium Company (up 4.53%), Vedanta (up 3.81%), Hindustan Zinc (up 5.27%), NMDC (up 2.84%) and Hindalco industries (up 3.88%) edged higher.
Shares of steel makers gained on reports that the government will soon notify a 20% import tax on some hot-rolled steel products after a government body found evidence that rising imports from China, Japan, South Korea and Russia pose a threat to the domestic steel industry. Jindal Steel & Power (up 3.96%), JSW Steel (up 3.02%), Tata Steel (up 3.28%) and Steel Authority of India (up 1.76%) edged higher. It may be recalled that the Director General of Safeguards last week recommended imposition of provisional safeguard duty of 20% on import of hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 MM or more for a period of 200 days. The safeguard duty is a global safeguard measure to protect the domestic industry and once imposed the levy is applicable on import of the product from all countries.
Shares of coal mining giant Coal India rose 1.69% at Rs 339.50.
Shares of power sector companies and banking stocks gained on media reports that Prime Minister Narendra Modi is set to meet bosses of loss-making state-government run electricity utilities today, 14 September 2015, to debate a rescue package for the power transmission and distribution sector. According to reports, the government has identified weak financials and high debt of state-government run electricity utilities as the key obstacles for the growth of the power sector in the country. According to reports, Indian banks have outstanding loans aggregating Rs 53000 crore to state-government run electricity utilities and there is a risk of majority of these loans turning into bad loans.
Among power sector stocks, Adani Power (up 5.17%), Reliance Power (up 4.18%), Reliance Infrastructure (up 3.28%), NTPC (up 5.1%), JSW Energy (up 2.57%), Tata Power (up 3.27%), GVK Power & Infrastructure (up 1.02%), Power Grid Corporation of India (up 2.74%) and Torrent Power (up 0.98%) edged higher. Shares of NHPC were unchanged at Rs 16.10.
Jaiprakash Power Ventures rose 3.27% at Rs 6. The company on Saturday, 12 September 2015, announced that its 400 megawatts (MW) Vishnuprayag hydro power plant, which was temporarily shut down with effect from 25 June 2015, has resumed power generation with effect from 11 September 2015. The company had to suspend operations at the power plant in June 2015 due unprecedented flood in river Alakhnanda.
A possible solution to loss-making state-government run electricity utilities' woes aided gains for bank stocks. Among PSU banks, Union Bank of India (up 3.62%), Andhra Bank (up 3.11%), Bank of India (up 3.03%), IDBI Bank (up 2.94%), Corporation Bank (up 2.41%), Canara Bank (up 3.19%), State Bank of India (up 2.17%), Bank of Baroda (up 2.93%), Punjab National Bank (up 2.12%) and United Bank of India (up 1.44%) edged higher. Dena Bank (down 0.86%) declined. Vijaya Bank was unchanged.
Among private sector banks, Yes Bank (up 2.8%), Axis Bank (up 3.05%), Kotak Mahindra Bank (up 2.45%), IndusInd Bank (up 0.74%), ICICI Bank (up 1.8%) and HDFC Bank (up 0.93%) edged higher.
PSU OMCs gained as crude oil prices declined. HPCL (up 2.34%), BPCL (up 3.66%) and Indian Oil Corporation (up 0.7%) edged higher. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
On the macro front, the latest data showed that the annual rate of inflation based on monthly wholesale price index (WPI) remained in negative zone for the 10th month in a row in August 2015. The WPI inflation stood at minus 4.95% (provisional) for the month of August 2015 compared to minus 4.05% (provisional) July 2015.
Meanwhile, data released after market hours on Friday, 11 September 2015, showed that India's current account deficit (CAD) narrowed to 1.2% of GDP in Q1 June 2015 from 1.6% of GDP in Q1 June 2014. This improvement was mainly on account of the merchandise trade deficit which contracted on a year-on-year (y-o-y) basis due to a larger absolute decline in merchandise imports relative to merchandise exports. The reduction in the CAD was also enabled by higher net earnings through services and lower outflow on account of primary income (profit, dividend and interest).
Another data released after market hours on Friday, 11 September 2015, showed that India's index of industrial production (IIP) increased 4.2% in July 2015 over a year ago compared with the revised growth of 4.4% in June 2015. The IIP growth for June 2015 has been scaled up 4.4% in the first revision compared with 3.8% reported provisionally.
Meanwhile, lower global crude oil prices and a recovery in the rupee against the dollar augur well for India. India imports about 80% of its crude requirements and lower crude oil prices ease concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. In the global commodities markets, Brent for October settlement was currently off 47 cents at $47.67 a barrel. The contract had fallen 75 cents or 1.53% to settle at $48.14 a barrel during the previous trading session. The October Brent contract expires tomorrow, 15 September 2015. Brent for November settlement was currently off 41 cents at $48.63 a barrel.
A recovery in the rupee against the dollar has eased concerns about higher crude import costs. In the foreign exchange market, the partially convertible rupee was hovering at 66.325, compared with its close of 66.53 during the previous trading session. A weak rupee raises the cost of imports.
The Sensex has lost 426.39 points or 1.62% in this month so far (till 14 September 2015). The Sensex has fallen 1,642.72 points or 5.97% in this calendar year so far (till 14 September 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 1,023.16 points or 4.12%. The Sensex is off 4,168.04 points or 5.97% from a record high of 30,024.74 hit on 4 March 2015.
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