Key benchmark indices extended initial gains triggered by the confluence of positive factors viz. forecast of above normal southwest monsoon in June-September 2016, a further easing of consumer price inflation raising hopes of further rate cut from the Reserve Bank of India, rebound in industrial production and gains in global stocks. At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 378.56 points or 1.51% at 25,524.15. The Nifty 50 index was currently up 117.65 points or 1.53% at 7,826.60. The Sensex hit fourteen-week high and the Nifty hit its highest level in more than 14 weeks. The India Meteorological Department (IMD) in its long range forecast for the 2016 southwest monsoon season has predicted good rains.
The Sensex jumped 401.47 points or 1.59% at the day's high of 25,547.06 in morning trade, its highest level since 6 January 2016. The barometer index gained 212.83 points or 0.84% at the day's low of 25,358.42 in early trade. The Nifty rose 124.60 points or 1.61% at the day's high of 7,833.55 in morning trade, its highest level since 4 January 2016. The index rose 63.25 points or 0.82% at the day's low of 7,772.20 in early trade.
The broad market depicted strength. There were almost four gainers against every loser on BSE. 1,528 shares rose and 390 shares fell. A total of 78 shares were unchanged. The BSE Mid-Cap index was currently up 1.14%. The BSE Small-Cap index was currently up 1.24%. Both these indices underperformed the Sensex.
In overseas stock markets, Asian stocks gained as rising crude prices buoyed energy producers and a weaker Japanese currency boosted shares in Tokyo. In Japan, the Nikkei 225 Average was currently up 2.4%. Chinese stocks edged higher after trade data showed stronger than expected rise in exports in March. In mainland China, the Shanghai Composite was currently up 2.09%. In Hong Kong, the Hang Seng index was currently up 2.39%. Chinese exports expanded in March for the first time in nine months, the latest data showed. Exports rose 11.5% in March year-over-year in dollar terms. Imports declined 7.6%, compared with February's 13.8% drop.
US stocks gained yesterday, 12 April 2016, led by energy companies after news reports said Saudi Arabia and Russia were working toward an agreement to cut oil production. The world's major crude oil producers led by Russia and Saudi Arabia have convened a meeting on Sunday, 17 April 2016, in Doha, Qatar to discuss measures to stabilise prices, including a proposal to freeze output. Iran has ruled out freezing output until its production recovers to pre-sanction levels.
Axis Bank gained 1.65%. The private sector bank before market hours today, 13 April 2016, announced reduction in lending rates. The bank has reduced its Marginal Cost of Funds based Lending Rate (MCLR) by 15 basis points (bps) across tenors. The reduced MCLRs will be effective from 18 April 2016. The MCLR for overnight loans will be 8.95%, for one month will be 9.05% and for three months will be 9.25%. The MCLR on 6-month loans will be 9.3% and for one-year loans the rate would be 9.35%. MCLR on two-year loans is 9.45% and for three years loans it is 9.5%. Axis Bank also reduced base rate by 5 bps to 9.45% effective from 18 April 2016.
The cut in lending rate follows reduction in policy rates by the Reserve Bank of India (RBI) after a scheduled policy review on 5 April 2016. The RBI cut its benchmark policy rate viz. the repo rate by 25 basis points to 6.5% from 6.75% on 5 April 2016. At that time, the central bank also announced the fine-tuning of its liquidity management framework.
Auto stocks extended gains registered during the previous trading session. Ashok Leyland (up 0.67%), Maruti Suzuki India (up 1.77%), Eicher Motors (up 1.54%), and Tata Motors (up 2.13%) gained.
Shares of tractor manufacturer Mahindra & Mahindra (M&M) jumped 4.93% after India Meteorological Department (IMD) in its long range forecast for the 2016 southwest monsoon season predicted good rains.
Shares of two-wheeler makers rose after the Indian weather department predicted good monsoon this year. TVS Motor Company (up 1.24%), Bajaj Auto (up 1.66%) and Hero MotoCorp (up 0.46%) edged higher. A good monsoon could boost rural incomes, which in turn could boost sales of two-wheeler makers in rural India.
Capital goods stocks gained. Bharat Heavy Electricals (Bhel) (up 1.31%), Havells India (up 0.4%), ABB India (up 0.41%), Bharat Electronics (up 1.62%), Thermax (up 0.57%), and Siemens (up 1.68%) gained.
L&T gained 1.35% after the company announced that its subsidiary Larsen & Toubro Infotech (L&T Infotech) has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) yesterday, 12 April 2016 in order to undertake an initial public offer (IPO) of its equity shares of face value of Re 1 each. The offer comprises of an offer for sale (OFS) of up to 1.75 crore equity shares by L&T. The announcement was made after market hours yesterday, 12 April 2016.
Kaveri Seed Company jumped 6.13% after the company said that it opened a new plant at Karimnagar district in Telangana. The company said that the plant has an installed capacity of 10 to 20 tonnes (paddy/maize) of production per hour based on the crop. The new plant is scheduled to commence operations in the first week of May 2016. G. V. Bhaskar Rao, Managing Director of Kaveri Seed said that the new plant will enhance the existing capacity of seed process to meet the growing demand from the markets. The announcement was made after market hours yesterday, 12 April 2016.
On the macro front, industrial production rose 2% in February 2016 over February 2015, snapping consistent decline for last three straight months. The mining output posted healthy 5% growth, while electricity generation improved 9.6% contributing to the overall growth in industrial output in February 2016. The output of the manufacturing sector improved 0.7% in February 2016.
Another data showed that inflation based on consumer price index (CPI) dipped to six month low of 4.83% in March 2016, with the index easing for second straight month. The CPI inflation for February 2016 was revised slightly upward to 5.26% from the provisional figure of 5.18% reported earlier. Both the CPI and industrial production data were announced after market hours yesterday, 12 April 2016.
The India Meteorological Department (IMD) said in its initial monsoon forecast that the southwest monsoon is likely to be 106% of the Long Period Average (LPA) during the four-month period from June to September 2016, with an error margin of plus/minus 5%. The IMD's announcement hit the market after trading hours yesterday, 12 April 2016. As the sea surface temperature conditions over the Pacific and Indian Oceans, particularly the ENSO conditions over the Pacific (El Nino or La Nina) are known to have strong influence on the Indian summer monsoon, IMD is carefully monitoring the sea surface conditions over the Pacific and the Indian oceans. The latest forecast from the Monsoon Mission Coupled Climate Model points to El Nino conditions weakening to moderate to weak levels during the first half of the monsoon season and ENSO neutral conditions likely to get established thereafter, the weather office said in a statement.
The IMD will issue an updated monsoon forecast in June 2016 as a part of the second stage forecast. Along with the updated forecast, the IMD will issue separate forecasts for rainfall in July and August and the distribution of rainfall over the four geographical regions of India.
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