Bank stocks advance on hopes of interest rate cut

Key benchmark indices extended initial gains and hit fresh intraday high in morning trade. The barometer index, the S&P BSE Sensex, was trading above the psychological 27,000 mark after regaining that level in opening trade. The S&P BSE Sensex was currently up 384.68 points or 1.43% at 27,262.16. The market breadth indicating the overall health of the market was strong with over three gainers for every loser.

Interest rate sensitive bank stocks gained after latest government data showed easing of inflation based on consumer price index (CPI) to a four-month low in April raised expectations of interest rate cut by the Reserve Bank of India.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 1329.43 crore yesterday, 12 May 2015, as per provisional data as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1331.93 crore yesterday, 12 May 2015, as per provisional data.

Brent crude extended gains after yesterday's strong gains, supported by bets that US crude stockpiles will fall for a second straight week as production slows.

In overseas markets, Asian stocks edged higher today, 13 May 2015 as investors bet that a batch of economic data from China due later in the day would bolster the case for more stimulus in the world's second-largest economy. US stocks declined for a second straight session yesterday, 12 May 2015 though losses were modest after indices recovered from a bout of selling linked to fluctuations in treasury yields.

At 10:15 IST, the S&P BSE Sensex was up 384.68 points or 1.43% at 27,262.16. The index jumped 422.32 points at the day's high of 27,299.8 in morning trade. The index rose 112.01 points at the day's low of 26,989.49 in early trade.

The CNX Nifty was up 117.20 points or 1.44% at 8,244.15. The index hit a high of 8,254.95 in intraday trade. The index hit a low of 8,153.80 in intraday trade.

The market breadth indicating the overall health of the market was strong with over three gainers for every loser. On BSE, 1,405 shares gained and 451 shares fell. A total of 76 shares were unchanged.

The BSE Mid-Cap index was up 179.20 points or 1.74% at 10,453.28, outperforming the Sensex. The BSE Small-Cap index was up 132.32 points or 1.23% at 10,911.02, underperforming the Sensex.

The total turnover on BSE amounted to Rs 936 crore by 10:15 IST compared with Rs 228 crore by 09:30 IST.

GAIL (India) (up 3.11%), M&M (up 2.92%) and Tata Power Company (up 2.66%) edged higher from the Sensex pack.

Index heavyweight Reliance Industries (RIL) rose 0.92%. Reliance Jio Infocomm (RJIL), a subsidiary of RIL signed a $750 million loan backed by Korea Trade Insurance Corporation (K-sure) on 7 May 2015. The loan is guaranteed by RIL and will be primarily used to finance goods and services procured from Samsung Electronics and Ace Technologies Corp., which are being sourced for the infrastructure rollout of RJIL. This is the second round of financing for RJIL from Korean ECAs and the third overall between the group and Korean ECAs in three years highlighting the growing business with Korean organisations. It is also K-sure's largest deal in India. It has a door to door tenor of 12 years including a 2 year availability period and 10 year repayment period thereafter.

Interest rate sensitive bank stocks gained after latest government data showed easing of inflation based on consumer price index (CPI) to a four-month low in April raised expectations of interest rate cut by the Reserve Bank of India.

Among private bank stocks, HDFC Bank (up 1.49%), IndusInd Bank (up 1.73%), Kotak Mahindra Bank (up 1.61%), Axis Bank (up 3.09%), Yes Bank (up 2.61%), and ICICI Bank (up 2.06%) gained.

Among PSU bank stocks, State Bank of India (SBI) (up 2.3%), Punjab National Bank (up 1.57%), Bank of Baroda (up 2.59%), Canara Bank (up 2.53%), Bank of India (up 3.36%) and Union Bank of India (up 8.32%) gained.

Brent crude extended gains after yesterday's strong gains, supported by bets that US crude stockpiles will fall for a second straight week as production slows. Brent for June settlement was up 30 cents at $67.16 a barrel. The contract had gained $1.95 a barrel or 3% to settle at $66.86 a barrel during previous trading session.

Data released by government after market hours yesterday, 12 May 2015 showed that industrial output growth touched a five-month low of 2.1% in March from a revised 4.9% in February on the back of an across-the-board slowdown in production. Consumer price index-based retail inflation eased to a four-month low of 4.87% in April from a revised 5.25% in March as prices of food items, vegetables and fruits turned cheaper.

The government will unveil data on inflation based on the wholesale price index (WPI) for April 2015 tomorrow, 14 May 2015. The WPI based inflation dipped to minus 2.3% in March 2015 compared with minus 2.1% in February 2015.

Prime Minister Narendra Modi's three nation official visit to China, Mongolia and Republic of Korea begins tomorrow, 14 May and ends on 19 May 2015. In China, Prime Minister will visit Xian, Beijing and Shanghai from 14 May to 16 May 2015. He will hold bilateral meetings with China's leadership and participate in cultural and business events. PM will attend an event organized by the Indian community in China. Prime Minister's official engagements in Mongolia will be on 17 May 2015. This is the first ever visit by a Prime Minister of India to Mongolia. Prime Minister's visit to Republic of Korea will be on 18 May to 19 May 2015. PM will hold bilateral discussions with President Park Geun-hye and meet with important business leaders in Seoul.

Meanwhile, proceedings in parliament are being keenly watched. As per reports, the government, under pressure from the opposition, was forced to defer its plans to legislate land acquisition and goods and services tax (GST) laws. The government has reportedly referred the Land Acquisition Bill, which was introduced in Lok Sabha on 11 May 2015 to a joint committee of both Lok Sabha and Rajya Sabha. The GST Bill, passed by the Lok Sabha last week, will be reportedly sent to a select committee of the Rajya Sabha. Both these panels are expected to submit their reports in the next session, reports indicated. Besides the Land Acquisition Bill and the GST Bill, a united Opposition had last week forced the government to refer another Bill related to regulating the real estate sector to a Select Committee of the Rajya Sabha. The only hope for the three Bills will now be in the monsoon session of Parliament in July 2015 as the budget session ends today, 13 May 2015.

The amended Land Acquisition Bill seeks to scrap the consent clause for acquiring land for five sectors industrial corridors, public private partnership projects, rural infrastructure, affordable housing and defence. The bill also exempts projects in these five areas from social impact assessments and allows the purchase of irrigated multi-cropped land and other types of agricultural land.

The Lok Sabha on 6 May 2015, passed the Constitution Amendment Bill in respect of goods and services tax (GST). A constitutional amendment bill needs to be approved by a two-thirds majority in both houses of Parliament and ratified by half the state legislative assemblies before coming into effect. While the Bharatiya Janata Party-led National Democratic Alliance found it easy to pass the GST bill in the Lok Sabha where it is in a majority, the real test will come in the Rajya Sabha where the ruling alliance is in a minority, with 62 members in a 245-member house.

GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.

Asian stocks edged higher today, 13 May 2015 as investors bet that a batch of economic data from China due later in the day would bolster the case for more stimulus in the world's second-largest economy. Key benchmark indices in Singapore, Taiwan, Hong Kong, Japan, Indonesia and South Korea rose by 0.15% to 0.64%. China's Shanghai Composite shed 0.15%.

China will today, 13 May 2015 release official data on April industrial production, as well as retail sales figures for last month and fixed investment.

US stocks declined for a second straight session yesterday, 12 May 2015 though losses were modest after indices recovered from a bout of selling linked to fluctuations in treasury yields.

In Europe, Greek Prime Minister Alexis Tsipras yesterday, 12 May 2015 called on lenders to break an impasse in cash-for-reform talks after Athens had to resort to a temporary expedient to make a crucial payment to the IMF.

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