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Market hits over 7-month high

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Recovery during the latter part of the trading session helped the two key benchmark indices clock modest gains. The barometer index, the S&P BSE Sensex, rose 129.21 points or 0.48% to settle at 26,843.14. The Nifty 50 index rose 39 points or 0.48% to settle at 8,218.95. A strong rebound for key benchmark indices during the latter part of the trading session materialized after media reports said India Meteorological Department (IMD) expects the onset of the monsoon at the Kerala coast in the next 4-5 days. The two key benchmark indices extended gains in late trade. The Sensex and the Nifty, both, hit their highest closing level in more than 7 months.

The arrival of the rains at the Kerala coast marks the onset of the June-September southwest monsoon season in India. The IMD on 15 May 2016 predicted a delay of 6 days for the onset of the monsoon rains in Kerala this year from the normal onset date which is 1 June. In its second stage forecast, the IMD today, 2 June 2016, said that rainfall over the country as a whole for the 2016 southwest monsoon season (June to September) is most likely to be above normal. Quantitatively, monsoon season rainfall for the country as a whole is likely to be 106% of the long period average (LPA) with a model error of plus/minus 4%. In its first stage forecast issued on 12 April 2016, the IMD had forecast rainfall to be 106% of the LPA with a model error of plus/minus 5%. The IMD announced the second stage forecast after trading hours.

In its region wise forecast, the IMD said that the rainfall is likely to be 108% of LPA in North-West India, 113% of LPA in Central India, 113% of LPA in South Peninsula and 94% of LPA in North-East India, all with a model error of plus/minus 8%. The rainfall over the country as whole is likely to be 107% of its LPA during July 2016 and 104% of LPA during August 2016 both with a model error of plus/minus 9%.

The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture.

The IMD said that the rapidly declining El Nino conditions became weak in early May 2016 and now have turned to neutral ENSO conditions. Recent changes in the atmospheric conditions over the Pacific also reflect the weakening El Nino conditions. Latest forecast from IMD-IITM coupled model indicates about 50% probability of La Nina conditions to establish during the monsoon season. Most of the other models also suggest development of La Nina conditions during the latter part of the monsoon season. El Nino conditions cause deficient rains in India whereas La Nina conditions trigger abundant rains in the country.

The Sensex rose 129.21 points or 0.48% to settle at 26,843.14, its highest closing level since 28 October 2015. The index rose 171.23 points or 0.64% at the day's high of 26,885.16. The index lost 72.91 points or 0.27% at the day's low of 26,641.02.

The Nifty 50 index rose 39 points or 0.48% to settle at 8,218.95, its highest closing level since 27 October 2015. The index rose 49.55 points or 0.6% at the day's high of 8,229.50. The index lost 25.20 points or 0.3% at the day's low of 8,154.75

The market breadth indicating the overall health of the market was negative. On BSE, 1,257 shares rose and 1,362 shares declined. A total of 167 shares were unchanged. The BSE Mid-Cap index rose 0.66%, outperforming the Sensex. The BSE Small-Cap index rose 0.29%, underperforming the Sensex.

The total turnover on BSE amounted to Rs 2176 crore, lower than turnover of Rs 2534.96 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Metal index (up 1.99%), the S&P BSE Finance index (up 0.93%), the S&P BSE Bankex (up 0.92%), the S&P BSE Capital Goods index (up 0.80%), the S&P BSE Basic Materials index (up 0.78%), the S&P BSE Energy index (up 0.75%), the S&P BSE Industrials index (up 0.68%), the S&P BSE Oil & Gas index (up 0.64%) and the S&P BSE Telecom index (up 0.49%), outperformed the Sensex. The S&P BSE Auto index (up 0.44%), the S&P BSE Utilities index (up 0.41%), the S&P BSE Power index (up 0.33%), the S&P BSE Consumer Discretionary Goods & Services index (up 0.27%), the S&P BSE FMCG index (up 0.18%), the S&P BSE Teck index (up 0.18%), the S&P BSE Realty index (up 0.15%), the S&P BSE IT index (up 0.05%), the S&P BSE Healthcare index (down 0.42%) and the S&P BSE Consumer Durables index (down 0.66%), underperformed the Sensex.

Metal and mining stocks were mixed. Hindalco Industries (up 2.72%), Tata Steel (up 2.56%), Vedanta (up 1.43%), Jindal Steel & Power (up 1.21%), Steel Authority of India (up 0.84%) and National Aluminium Company (up 0.36%) edged higher. JSW Steel (up 0.09%), NMDC (down 0.23%), Hindustan Zinc (down 0.36%), Hindustan Copper (down 0.86%) and Bhushan Steel (down 0.97%) edged lower.

Copper edged lower in the global commodities markets. High Grade Copper for July 2016 delivery was currently off 0.17% at $2.0695 per pound on the COMEX.

Index heavyweight and cigarette major ITC fell 0.82% at Rs 357.80. The stock hit a high of Rs 361 and a low of Rs 353.35 in intraday trade.

Index heavyweight Reliance Industries (RIL) rose 0.28% at Rs 956. The company announced at the fag end of the trading session yesterday, 1 June 2016, that its wholly-owned subsidiary, Reliance Industrial Investments and Holdings, is investing $16 million in compulsorily convertible preferred shares of a technology start-up viz. NetraDyne Inc., USA. The US-based entity is involved in high-end technology driven product development of deep learning solutions and vision based analytics targeted at industries such as fleet management, automotive, security and surveillance. The entity is currently in advanced stages of product development. It is yet to commence commercial operations, RIL said in a statement. NetraDyne Inc's line of business has potential synergies with telecom and digital business initiatives of RIL apart from commercialization benefits in India, RIL added.

RIL further said that 50% of the investment in NetraDyne has been done on 31 May 2016. The balance 50% investment is likely to be completed by 31 March 2017. Upon conversion of the investment, Reliance Industrial Investments and Holdings will get about 15 million equity shares at $1.0613 per share. This translates to 40% equity stake.

Mahindra & Mahindra (M&M) fell 0.09% to Rs 1,332.70. M&M after market hours announced the launch of new electric sedan eVerito. The eVerito would be available in key cities like New Delhi, Mumbai, Bangalore, Pune, Kolkata, Chandigarh, Hyderabad, Jaipur and Nagpur with immediate effect. It will be priced at Rs 9.50 lakh (ex showroom Delhi, for D2 variant, post state subsidy and FAME incentive). The direct drive single speed transmission eVerito can be charged at home. It can be charged in 1 hour and 45 minutes through fast charging technology. On a full charge, the Mahindra eVerito can travel for up to 110 kms (based on vehicle loading) and can achieve a top speed of 86 kmph. Its running cost is Rs 1.15/km assuming cost of electricity at Rs 7 per unit.

The eVerito also features Boost Mode and Telematics which include real time and immediate assistance wherever the vehicle may be.

Tata Motors rose 0.89% at Rs 453.20 after the company announced monthly sales volume data for commercial and passenger vehicles. Tata Motors' total commercial and passenger vehicles sales rose 1% to 40,071 units in May 2016 over May 2015. Domestic sales of Tata commercial and passenger vehicles rose 2% to 35,643 units in May 2016 over May 2015. Exports declined 5% to 4,428 units in May 2016 over May 2015. The company announced the monthly sales volume data after market hours yesterday, 1 June 2016.

Maruti Suzuki India (MSIL) rose 0.53% at Rs 4,183.85. The company today, 2 June 2016, announced that it has advanced the regular bi-annual maintenance closure of its plants, earlier scheduled from 27 June to 2 July 2016 to 6 June to 11 June 2016. This will enable the closure period to be utilized for arranging supply of components, both from Subros as well as from other sources, and result in higher production volumes after the closure, MSIL said. Manufacture of cars, to the extent of component availability, is continuing at the Gurgaon plant from the second half of 1 June 2016, MSIL said. The announcement was made at the fag end of market hours today, 2 June 2016.

Hero MotoCorp (HMCL) rose 1.62% at Rs 3,137.30 after the company announced monthly sales volume data. HMCL's total two-wheelers sales rose 2.32% to 5.83 lakh units in May 2016 over May 2015. Market demand was expectedly subdued in May 2016, due to the heavy retail offlake that happened in April on account of the marriage season and regional festivals in different parts of the country during that month, the company said in a statement. A good monsoon after two consecutive years of sub-normal rains could lead to a change in sentiments in the rural markets, which may lead to a positive turn-around in the industry in the second half of this fiscal, HMCL said.

In the month of May, HMCL forayed into the world of motorcycle rally racing, through a strategic alliance with Speedbrain GmbH, the German off-road racing specialist. The newly formed 'Hero MotoSports Team Rally' made its debut at the Merzouga Rally, a Dakar series race that recently concluded in Morocco.

Bajaj Auto dropped after reporting muted growth in sales volume in May 2016. The stock fell 0.30% at Rs 2,594.85. Bajaj Auto's total sales rose 1% to 3.47 lakh units in May 2016 over May 2015. Motorcycles sales rose 2% to 3.07 lakh units in May 2016 over May 2015. Sales of commercial vehicles declined 7% to 40,311 units in May 2016 over May 2015. Exports fell 10% to 1.43 lakh units in May 2016 over May 2015. The company announced the monthly sales volume data before market hours today, 2 June 2016.

TVS Motor Company rose 2.74% at Rs 296.50 after the company said its total sales rose 11% to 2.43 lakh units in May 2016 over May 2015. The announcement was made after trading hours yesterday, 1 June 2016. TVS Motor Company said that total two wheeler sales increased by 13% to 2.38 lakh units in May 2016 over May 2015. Domestic two wheeler sales grew by 17.9% to 2.06 lakh units in May 2016 over May 2015. Scooters sales of the company grew by 20.2 % to 65,434 units in May 2016 over May 2015. Motorcycles sales grew by 5.6% to 96,485 units in May 2016 over May 2015. Three wheeler sales fell 40.85% to 5,463 units in May 2016 over May 2015.

The company's total exports dropped 18.46% to 35,545 units in May 2016 over May 2015. Two wheeler exports fell 10.97% to 31,434 units in May 2016 over May 2015. TVS Motor Company said that the restricted availability of forex is affecting Indian exports to Africa including that of the company.

Separately, the company after market hours today, 2 June 2016, announced the launch of its new four stroke moped TVS XL 100 in Himachal Pradesh, Chandigarh, Punjab, New Delhi and Haryana markets. TVS XL is priced at Rs 29,988 ex showroom in Himachal Pradesh, Rs 30,281 ex showroom in Chandigarh, Rs 29,808 ex showroom in Punjab, Rs 30,174 ex showroom in New Delhi and Rs 29,953 ex showroom in Haryana.

Shares of state-run coal mining giant Coal India rose 3.20% at Rs 306.40 after the company's announcement that it has achieved 95% of targeted production at 42.58 million tonnes in May 2016. Coal India and its subsidiaries on provisional basis achieved 89% of targeted offtake at 45.53 million tonnes in May 2016. The announcement was made after market hours yesterday, 1 June 2016.

IT stocks were mixed. MphasiS (up 3.27%), Tech Mahindra (up 1.36%), TCS (up 0.65%), Infosys (up 0.32%) and Hexaware Technologies (up 0.12%), edged higher. MindTree (down 0.17%), Oracle Financial Services Software (down 0.85%), Persistent Systems (down 1.54%), HCL Technologies (down 1.82%) and Wipro (down 2.36%) edged lower.

Most FMCG shares edged higher. Godrej Consumer Products (up 4.03%), Jyothy Laboratories (up 3.47%), Dabur India (up 2.77%), Hindustan Unilever (up 2.01%), Colgate Palmolive (India) (up 1.32%), Britannia Industries (up 1.22%) and Tata Global Beverages (up 0.97%), edged higher. Nestle India (down 0.17%), Bajaj Corp (down 0.25%), Procter & Gamble Hygiene & Health Care (down 0.64%), GlaxoSmithKline Consumer Healthcare (down 0.65%) and Marico (down 1.11%) edged lower.

Stocks of public sector banks edged higher. Union Bank of India (up 2.20%), Bank of Baroda (up 2.13%), Syndicate Bank (up 1.94%), Vijaya Bank (up 1.85%), Indian Bank (up 1.54%), IDBI Bank (up 1.44%), State Bank of India (up 1.34%), Canara Bank (up 1.09%), Andhra Bank (up 0.82%), Bank of India (up 0.70%), Dena Bank (up 0.51%), Punjab and Sind Bank (up 0.38%), UCO Bank (up 0.29%) and Allahabad Bank (up 0.19%), edged higher. Central Bank of India fell 0.12%.

Punjab National Bank (PNB) rose 0.91% at Rs 77.45. PNB announced revision to its lending rates based on marginal cost of funds to be effective from 1 June 2016. PNB's Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 9.15%, for one month will be 9.20% and for three months will be 9.30%. The MCLR on 6-month loans will be 9.35% and for one-year loans the rate would be 9.40%, the bank said. MCLR for three-year loans would be at 9.55% and loans with five-year maturity would carry an MCLR of 9.70%, the bank said. The announcement was made after market hours yesterday, 1 June 2016.

All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.

Bank of Maharashtra rose 1.97% at Rs 28.40 after the state-run bank said it has decided to raise up to Rs 1000 crore through follow-on public offer (FPO)/rights issue/qualified institutional placement (QIP) etc. subject to the necessary approvals. The announcement was made during market hours today, 2 June 2016.

Stocks of private sector banks were mixed. IndusInd Bank (up 1.35%), Federal Bank (up 1.08%) and ICICI Bank (up 0.48%), edged higher. Kotak Mahindra Bank (down 0.16%) and City Union Bank (down 0.33%), edged lower.

HDFC Bank ended flat at Rs 1,175.25. The stock hit a high of Rs 1,180 and a low of Rs 1,160.50 in intraday trade.

Yes Bank rose 3.10% to Rs 1,048.65. The stock hit high of Rs 1,052 intraday trade, which is a record high for the counter. The scrip hit a low of Rs 1,011.30 in intraday trade.

Axis Bank rose 2.14% at Rs 524.35 after the private sector bank said it has signed tripartite share subscription agreement and shareholders agreement with A.Treds and mjunction services (Mjunction). A.Treds is a subsidiary company of Axis Bank. Mjunction is a joint venture between Tata Steel and Steel Authority of India. Shares of Tata Steel were up 1.16% at Rs 336. Shares of Steel Authority of India were up 0.24% at Rs 41.95. As per the agreement, Axis Bank has been allotted 1.65 crore shares of A.Treds for Rs 16.50 crore and Mjunction was allotted 82.50 lakh shares of A.Treds for Rs 8.25 crore. Axis Bank now holds 67% stake and Mjunction holds 33% stake in A.Treds.

A.Treds is licensed by the Reserve Bank of India to engage in the business of trade receivables discounting systems (TReDS). Mjunction is the largest B2B e-commerce company in India. It is also the largest e-marketplace for steel in the world.

Separately, Axis Bank announced after market hours yesterday, 1 June 2016, that it has raised $500 million as senior fixed rate green bonds under the MTN programme. The notes have been priced at 160 basis points over the 5-year US Treasury Note, at a price of 99.479% to yield 2.988%. The notes will be denominated in US dollars and will bear fixed interest of 2.875% per annum, with interest payable semi-annually in arrears. The notes will be listed on the Singapore Stock Exchange and the London Stock Exchange.

Index heavyweight and housing finance major HDFC rose 1.55% at Rs 1,260.55. The stock hit a high of Rs 1,263 and a low of Rs 1,232.50 in intraday trade.

Meanwhile, the central government yesterday, 1 June 2016, announced increase ranging from 1.5% to 9.2% in the minimum support prices (MSPs) of Kharif crops for the 2016-17 season. The MSPs include a bonus of Rs 425 per quintal for pulses, namely Arhar (Tur), Urad and Moong, a bonus of Rs 200 per quintal for Sesamum and a bonus of Rs 100 per quintal for other kharif oilseeds namely, Groundnut-in-shell, Sunflowerseed, Soyabean, and Nigerseed. The government said in a statement that the decision to offer bonus over MSP on pulses and oilseeds is aimed at giving a strong price signal to farmers to increase acreage and invest for increase in productivity of these crops. There is an increasing gap between the demand and domestic supply of pulses and oilseeds and the reliance on import is increasing. The increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil.

With a view to stabilize prices of pulses, the government is also creating buffer stocks of pulses through both domestic procurement and import.

The Sensex and the Nifty edged higher for the second day in a row. The Sensex has gained 175.18 points or 0.66% in two trading sessions from its close of 26,667.96 on 31 May 2016. The Sensex has risen 725.60 points or 2.78% in calendar year 2016 so far (till 2 June 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 4,348.53 points or 19.33%. The Sensex is off 1,735.19 points or 6.07% from a 52-week high of 28,578.33 hit on 23 July 2015. The Sensex is off 3,181.60 points or 10.60% from a record high of 30,024.74 hit on 4 March 2015.

In overseas stock markets, European equities edged higher after the latest data signalled the US economy is recovering. The US economy is the world's biggest economy. The key event of the day is the European Central Bank's (ECB) policy meeting later in the global day. The ECB is widely expected to keep its monetary policy unchanged but will probably raise growth and inflation forecasts. The central bank's President Mario Draghi will hold a press conference after the policy decision is announced.

Earlier during the global day, Asian stocks witnessed a mixed trend. Japanese stocks edged lower as the yen strengthened against the dollar. The Nikkei 225 Average settled 2.32% lower. A stronger yen hurts the competitiveness of Japanese exporters. Japan's Prime Minister Shinzo Abe yesterday, 1 June 2016, said that a sales-tax increase will be postponed until 2019 from April 2017.

US stocks eked out minuscule gains yesterday, 1 June 2016, following an intraday recovery in oil prices and better-than-expected manufacturing data. The Institute for Supply Management said its manufacturing index rose to 51.3% last month from 50.8% in April. The data showed that manufacturers are expanding their businesses at a very slow pace.

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First Published: Thu, June 02 2016. 16:41 IST