Prime Minister Narendra Modi's comments in an interview to a foreign newspaper that he had undertaken the maximum reforms during the past two years in office and that he expects the goods and services tax (GST) bill to pass this year triggered the latest rally on the domestic bourses. The barometer index, the S&P BSE Sensex, rose 505.48 points or 1.95% to 26,386.65, as per the provisional closing data. The gains for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty rose 134.75 points or 1.7% to 8,069.65, as per the provisional closing data. The Nifty provisionally settled above the psychologically important 8,000 level after moving past that mark in mid-afternoon trade. The Sensex provisionally settled above the psychologically important 26,000 mark after piercing that level in early trade.
Strong Q4 March 2016 results from engineering and construction major L&T and the company's guidance of a 15% growth in order inflow during the current financial year also aided the latest rally on the bourses. L&T shares surged after the company announced the results and the order inflow guidance after trading hours yesterday, 25 May 2016.
The Sensex hit its highest level in almost 29 weeks when it jumped 517.77 points, or 2% at the day's high of 26,398.94 in late trade. The index rose 60.34 points, or 0.23% at the day's low of 25,941.51 in early trade. The Nifty hit its highest level in more than 29 weeks when it jumped 148.10 points, or 1.87% at the day's high of 8,083 in late trade. The index rose 13.60 points, or 0.17% at the day's low of 7,948.50 in early trade.
Modi said he had opened up more of the economy to foreign investment and made changes to curb corruption, fill gaps in rural infrastructure and make it easier to do business. He also said that he has an enormous task ahead. The BJP led National Democratic Alliance (NDA) government completed two years in office today, 26 May 2016. The prime minister said that he would look to states to further liberalize the country's rigid labour laws.
The market breadth indicating the overall health of the market was positive. On BSE, 1,402 shares rose and 1,149 shares fell. A total of 196 shares were unchanged. The BSE Mid-Cap index provisionally rose 1%. The BSE Small-Cap index provisionally rose 0.86%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2920 crore, higher than turnover of Rs 2323.39 crore registered during the previous trading session.
In overseas stock markets, Asian and European stocks edged higher as gains in crude oil prices boosted investors' risk appetite. 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.
State-run ONGC rose 2.05% to Rs 214.50 after net profit rose 12.22% to Rs 4416.11 crore on 15.42% decline in total income to Rs 19776.70 crore in Q4 March 2016 over Q4 March 2015. The result was announced at the fag end of the trading session today, 26 May 2016.
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 13.85% to Rs 1,470.10. The stock hit a high of Rs 1,484 and a low of Rs 1,389.75 in intraday trade. 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.
Tata Steel rose 0.83% at Rs 327.05 after the company trimmed losses in Q4 March 2016. The company reported consolidated net loss of Rs 3213.76 crore in Q4 March 2016, lower than net loss of Rs 5674.29 crore in Q4 March 2015. Tata Steel's total income fell 12.33% to Rs 29636.69 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 25 May 2016.
There was a drop in realisations from steel sales across the group as steel prices slid to 10-year lows. However, despite these challenges, the consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased in Q4 March 2016 on the back of higher deliveries and better operating margins in India, cost benefits from European restructuring and improved performance of the South East Asia operations. The company continued to divest its non-core assets and raised Rs 4478 crore through monetisation of same.
Given the challenging situation faced in Europe, the company has taken several steps to restructure the European operations. Tata Steel UK signed an agreement with Greybull Capital to sell its Long Products Europe business. The deal will be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements. The Tata Steel Europe board under the advise of the Tata Steel board is actively reviewing all options for the Tata Steel UK Business including a potential sale of the business.
Tata Steel announced the start of commercial production at the 3 million tonnes per annum (mtpa) Kalinganagar steel plant. The stabilisation process is currently underway. The facility will produce flat steel for high end applications enabling the company to expand its product portfolio in the ship building, defence equipment, energy & power, infrastructure, and aviation sectors. It will also consolidate Tata Steel's leadership position in the domestic automotive segment.
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