Nifty hits highest level in almost 29 weeks

Key benchmark indices extended gains in afternoon trade, with the barometer index, the S&P BSE Sensex, hitting its highest level in almost 21 weeks and the Nifty hitting its highest level in almost 29 weeks. At 13:15 IST, the barometer index, the S&P BSE Sensex, was up 245.08 points or 0.95% at 26,126.25. The gains for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty was currently up 63.70 points or 0.8% at 7,998.60. The Sensex was currently trading above the psychologically important 26,000 mark. The barometer index has alternately moved above and below that level so far during the trading session after piercing that level in early trade.

The Sensex jumped 248.22 points, or 0.95% at the day's high of 26,129.39 in afternoon trade, its highest level since 1 January 2016. The index rose 60.34 points, or 0.23% at the day's low of 25,941.51 in early trade. The Nifty rose 64.75 points, or 0.81% at the day's high of 7,999.65 in afternoon trade, its highest level since 6 November 2015. The index rose 13.60 points, or 0.17% at the day's low of 7,948.50 in early trade.

The market may remain volatile during the remaining part of the trading session as traders roll over positions in the futures & options (F&O) segment from the near month May 2016 series to June 2016 series. The near month May 2016 derivatives contracts are set to expire today, 26 May 2016.

The market breadth indicating the overall health of the market was positive. On BSE, 1,273 shares rose and 1,081 shares fell. A total of 167 shares were unchanged. The BSE Mid-Cap index was currently up 0.44%. The BSE Small-Cap index was currently up 0.51%. Both these indices underperformed the Sensex.

In overseas stock markets, key benchmark indices in Germany, France and UK edged higher as gains in crude oil prices boosted investors' risk appetite. Most Asian stocks edged higher after overnight gains for US stocks. Energy and materials shares sector stocks led gains in US stocks yesterday, 25 May 2016, following a jump in crude oil prices triggered by a weekly report showing a decline in US crude inventories.

Capital goods stocks edged higher after the Union Cabinet approved the National Capital Goods policy to support and boost development of this crucial sector. ABB India (up 1.86%), Bharat Heavy Electricals (Bhel) (up 1.88%), BEML (up 1.32%), Bharat Electronics (up 1.78%), Punj Lloyd (up 2.39%), Crompton Greaves (up 0.25%), Siemens (up 2.1%) and Thermax (up 0.45%) gained.

The National Capital Goods policy aims at increasing production of capital goods from Rs 2.30 lakh crore in 2014-15 to Rs 7.50 lakh crore in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million. The policy envisages increasing exports from the current 27% to 40% percent of production. It will increase the share of domestic production in India's demand from 60% to 80%, thus making India a net exporter of capital goods.

Engineering and construction major L&T spurted after the company's management said in a conference call held after the announcement of the company's Q4 March 2016 results yesterday, 25 May 2016, that it expects L&T's order inflow to rise 15% in the year ending 31 March 2017 (FY 2017). The stock jumped 11.89% to Rs 1,444.90. The stock hit a high of Rs 1,449.45 and a low of Rs 1389.75 so far during the day. L&T expects 12-15% growth in revenue in the year ending 31 March 2017 (FY 2017). L&T reported 18.55% rise in consolidated net profit to Rs 2453.64 crore on 17.88% rise in total income to Rs 33375.26 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 25 May 2016.

L&T said that the order inflow during Q4 March 2016 was Rs 43334 crore of which one third constituted international orders. The order intake of L&T's infrastructure division rose just 3% at Rs 29103 crore in Q4 March 2016 over Q4 March 2015. The order intake of its hydrocarbon divsion rose sharply to Rs 4963 crore in Q4 March 2016 from Rs 699 crore in Q4 March 2015.

L&T's order book stood at Rs 249949 crore as on 31 March 2016, higher by 7% on year-on-year basis. International order book constituted 28% of the total order book.

L&T said in a statement that the company continues its emphasis on operational efficiencies, faster execution of projects on hand and reduced working capital levels. Given its track record, diversified portfolio and healthy order book, the company is focusing on profitable execution of the existing order book and is confident of its growth in the near to medium term by leveraging its presence in both the domestic and international segments.

Telecom stocks rose on renewed buying. Idea Cellular (up 4.06%), Bharti Airtel (up 0.63%), MTNL (up 0.85%) and Tata Teleservices (Maharashtra) (up 0.46%) gained. Reliance Communications shed 0.11%.

Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan today, 26 May 2016, said in a speech in Mumbai to central bank governors from the nations of the South Asian Association for Regional Cooperation (SAARC) grouping that the region is facing newer challenges arising from uncertainties in other parts of the world. Possible moves by the US Federal Reserve, a potential rebound of oil prices, possible Brexit, geopolitical risks in the Middle East and volatility in financial markets due to risk-on or risk-off sentiment were some of the possibilities, he pointed out. Sharp slowdown of the Chinese economy, according to him still remained a significant risk for the global economy and the SAARC region. Bad loans in China's banking system were likely to grow over current levels and in addition there might be serious weaknesses in the shadow banking system, which could feed back to banks, Rajan said. Chinese growth would depend not just on its policies, but also on growth elsewhere in the world, Rajan said.

The eight countries in the SAARC region are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

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