Trading for the week started on a positive note as key benchmark indices provisionally settled with decent gains. The barometer index, the S&P BSE Sensex, rose 133.85 points or 0.49% at 27,278.76, as per the provisional closing data. The Nifty 50 index gained 41.30 points or 0.5% at 8,369.65, as per the provisional closing data. However, key indices settled off their highs weighed by lower European stocks. The market sentiment was positive after pick up of monsoon rains during the weekend. Gains in Asian stocks had aided the initial upmove on the domestic bourses.
Key indices came off intraday highs after extending initial gains to hit multi month highs after registering a gap up opening. The Sensex rose 106.15 points or 0.39% at the day's low of 27,251.06 in late trade. The barometer index jumped 240.75 points or 0.88% at the day's high of 27,385.66 in early afternoon trade, its highest level since 26 October 2015. The Nifty rose 36.35 points or 0.43% at the day's low of 8,364.70 in late trade. The index rose 70.10 points or 0.84% at the day's high of 8,398.45 in early afternoon trade, its highest level since 20 August 2015.
The market sentiment was positive after pick up of monsoon rains during the weekend. The monsoon rains have reportedly covered nearly all of India except some parts of Gujarat and Rajasthan. Rainfall has picked up in central and northern India in the last few weeks, helping to narrow the rainfall deficit in the current season to 6%, sharply down from 18% in the first week of June. The India Meteorological Department (IMD) has forecast rains to be above normal in July and August 2016. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed.
In overseas stock markets, European stocks edged lower in volatile trade weighed by the financial sector. Chinese stocks led gains in Asian markets as expectations increased that global central banks might ease monetary policy following Britain's vote to leave the European Union (EU) last month. In mainland China, the Shanghai Composite ended 1.91% higher. In Hong Kong, the Hang Seng index settled 1.27% higher.
US stocks edged higher during the previous trading session on Friday, 1 July 2016, after better-than-expected manufacturing data and on fading worries about the Brexit, or British exit from the EU. US market will remain shut today, 4 July 2016, on account of Independence Day holiday.
Closer home, the market breadth indicating the overall health of the market was strong. On BSE, 1,708 shares rose and 1,022 shares declined. A total of 155 shares were unchanged. The BSE Mid-Cap index provisionally rose 0.58%. The BSE Small-Cap index provisionally gained 1.01%. Both these indices outperformed the Sensex.
State Bank of India (SBI) gained 1.53%. The bank said that it sold 5% stake in National Stock Exchange of India (NSE) constituting 22.5 lakh shares of NSE to Veracity Investments, a Mauritius based foreign institutional investor (FII) on 30 June 2016 at Rs 4,050 per share for a total consideration of Rs 911.25 crore. Post this transaction, SBI holds 5.19% stake in NSE while its subsidiary SBI Capital Markets holds another 4.33% in the NSE. The announcement was made during market hours today, 4 July 2016.
Separately SBI and Reliance Industries (RIL) signed shareholders' agreement on 30 June 2016 for setting up payments bank. The subscription and shareholders' agreement was signed by RIL as promoter with a 70% equity contribution and SBI as joint venture partner with 30% equity contribution on 30 June 2016. All requisite regulatory and statutory approvals will now be sought for operationalizing the payments bank. The announcement was made after market hours on Friday, 1 July 2016.
Shares of index heavyweight RIL gained 1.28%.
Realty stocks rose. DLF (up 4.89%), Omaxe (up 1.47%), Indiabulls Real Estate (up 0.36%), Unitech (up 2.41%), Housing Development & Infrastructure (HDIL) (up 1.4%), and Oberoi Realty (up 3.19%) edged higher.
The BSE Realty index had outperformed the market over the past one month till 1 July 2016, rising 8.15% compared with 1.61% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 21.95% as against Sensex's 7.42% rise.
Maruti Suzuki India declined 0.09% after the company said that its production fell 4.53% to 90,262 units in June 2016 over June 2015. The announcement was made during market hours today, 4 July 2016. The company at the time of announcement of sales figures for June on 1 July 2016 had said that that there was a disruption in production during June, due to the unfortunate incident of fire at Subros, a key vendor of the company. The company expects to recover the production loss during the course of the year.
Aviation stocks rose after the government announced draft regional connectivity scheme to promote regional air connectivity. InterGlobe Aviation (up 3.21%), Jet Airways India (up 4.47%) and SpiceJet (up 3.65%), edged higher.
To operationalise the Regional Air Connectivity Scheme (RCS), aircraft and helicopter operators would be required to assess the demand on various routes and submit their proposal for providing connectivity on such routes. They would be required to earmark certain number of seats on every flight for the RCS. The fare for such seats would be capped based on flight distance and time. An index has also been prepared for airfare caps for the RCS seats for fixed wing aircrafts and helicopters depending upon the distance. Airport Authority of India (AAI) will be the implementing agency for the s Scheme. The RCS route will have to include un-served airports i.e. airports where there is no scheduled commercial flight or under-served airports i.e. airports which have 7 or less scheduled commercial flights per week. The RCS routes would cover a length between 200 to 800 kilometre. This criteria will not apply to hilly areas, islands, North-east region and for helicopter operations.
The procedure for selecting airline operators would be based on reverse bidding mechanism. The selected airlines would be expected to commit 50% of the seats on RCS flights to be sold at the specified airfare cap. They would also be required to maintain a frequency of minimum, three flights per week and maximum seven flights per week. A Regional Connectivity Fund would be created to subsidise the operation of the RCS.
The central government will support the RCS scheme by levying an excise duty of only 2% on aviation turbine fuel (ATF) purchased at RCS airports for a period of three years. The service tax will be levied at only 10% of the taxable value of tickets for RCS seats for a period of one year. The operating airline will be free to enter into code sharing arrangement with domestic and international airlines. The concerned state governments will charge value added tax (Vat) of 1% or less on ATF at RCS airports for a period of 10 years. It will also provide security and fire services free of cost, besides providing electricity, water and other utility services at concessional rates.
The draft RCS will be placed in public domain for three weeks to enable stakeholders to give their suggestions. After this the details of the scheme would be finalized.
Carborundum Universal rose 3.21% to Rs 249.15 on BSE after a bulk deal of 9.25 lakh shares was executed on the scrip at Rs 255 per share at 13:44 IST on BSE today, 4 July 2016.
Indian Hotels Company rose 1.16% after the company through its overseas arm Samsara Properties sold 5.1% stake in Belmond Limited for $49.5 million. The proceeds from the sale of stake in Belmond are being utilized largely for retirement of debt, Indian Hotels Company (IHCL) said in a statement. After the latest stake sale, Samsara Properties holds a minuscule 0.44% of the Class 'A' common shares of Belmond. Samsara Properties is an indirect overseas wholly owned subsidiary of Indian Hotels Company. Belmond is a hotel company and an adventure travel operator. Operated and marketed under the Belmond brand, the company's collection embraces 44 hotel, river cruise and safari and luxury rail businesses in 22 countries.
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