IT stocks gain after good US economic data

Key benchmark indices trimmed almost entire intraday gains and were hovering near the flat line in early afternoon trade. At 12:21 IST, the S&P BSE Sensex was up 18.44 points or 0.07% at 28,261.73. The Nifty 50 index was currently up 3.65 points or 0.04% at 8,741.75. Key indices trimmed initial gains as caution prevailed ahead of the Reserve Bank of India (RBI)'s fourth bi-monthly monetary policy meeting today, 4 October 2016.

The major event today, 4 October 2016 is the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy meeting. The RBI after the third bi-monthly monetary policy on 9 August 2016, decided to keep the policy repo rate unchanged at 6.5%. Consequently, the reverse repo rate remained unchanged at 6%. RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4%. The latest monetary policy meeting will be the first meet where the interest rate decision is taken by a panel. Urjit Patel, the RBI governor, will be one among the six-member Monetary Policy Committee (MPC) recently notified by the government.

The Sensex rose 159.36 points or 0.56% at the day's high of 28,402.65 in early trade, its highest level since 29 September 2016. The barometer index rose 8.08 points or 0.03% at the day's low of 28,251.37 in early afternoon trade. The Nifty rose 40.20 points or 0.46% at the day's high of 8,778.30 in early trade, its highest level since 29 September 2016. The index rose 1.10 points or 0.01% at the day's low of 8,739.20 in early afternoon trade.

In overseas stock markets, Asian stocks rose after data showing expansion in US manufacturing boosted optimism over the health of the world's largest economy. China's stock exchange remained closed as part of a five-day National Holiday break. US stocks closed lower yesterday, 3 October 2016 as investors digested key economic news and kept an eye on oil prices.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,427 shares gained and 1,083 shares fell. A total of 131 shares were unchanged. The BSE Mid-Cap index was up 0.21%. The BSE Small-Cap index was up 0.35%. Both these indices outperformed the Sensex.

IT stocks rose after economic data showed expansion in US manufacturing. US is the biggest outsourcing market for Indian IT services firms.

HCL Technologies (up 1.01%), Oracle Financial Services Software (up 1.72%), Tech Mahindra (up 1.4%), TCS (up 0.08%), Infosys (up 0.44%), Wipro (up 0.98%), MindTree (up 0.96%), Hexaware Technologies (up 0.71%) and MphasiS (up 0.25%) rose.

The Institute for Supply Management said yesterday, 3 October 2016 its manufacturing index showed activity expanded in September after shrinking in August, with new orders and factory production rising as employment fell.

Majesco rose 4.93% after the company announced a five-year partnership with IBM to jointly offer a new cognitive, cloud-based platform to help insurance carriers create new services on IBM Cloud. The global partnership between Majesco and IBM is intended to help provide clients with the ability to speed the development of new customer services with predictive data analytics for insurance providers to bring new solutions to their clients. The announcement was made during market hours today, 4 October 2016.

Metal and mining stocks were in demand on renewed buying. Vedanta (up 3.3%), National Aluminium Company (up 2.92%), Jindal Steel & Power (up 5.92%), JSW Steel (up 0.51%), Tata Steel (up 0.82%), Steel Authority of India (Sail) (up 0.83%), Hindalco Industries (up 0.36%), NMDC (up 0.92%), Hindustan Copper (up 0.06%) edged higher. Hindustan Zinc fell 1.67%.

Copper edged lower in the global commodities market. High Grade Copper for December 2016 delivery was currently off 0.25% at $2.1865 per pound on the COMEX.

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