After paring gains in mid-morning trade, key benchmark indices extended gains in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex, was up 160.20 points or 0.62% at 26,041.37. The gains for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty was currently up 40.35 points or 0.51% at 7,975.25. 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 market may remain volatile today, 26 May 2016, 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 Sensex jumped 187.44 points, or 0.72% at the day's high of 26,068.61 in morning trade, its highest level since 28 April 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 51.45 points, or 0.65% at the day's high of 7,986.35 in morning trade, its highest level since 28 April 2016. The index rose 13.60 points, or 0.17% at the day's low of 7,948.50 in early trade.
The market breadth indicating the overall health of the market was positive. On BSE, 1,239 shares rose and 1,052 shares fell. A total of 161 shares were unchanged. The BSE Mid-Cap index was currently up 0.27%. The BSE Small-Cap index was currently up 0.35%. Both these indices underperformed the Sensex.
In overseas stock markets, most Asian stocks edged lower on lingering concerns about further interest-rate increases from the US Federal Reserve. 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.
Shares of oil exploration and production companies rose as global crude oil prices firmed up. Cairn India (up 1.84%), Oil India (up 1.48%) and ONGC (up 1.21%) edged higher. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms.
Index heavyweight Reliance Industries was down 0.37%.
Shares of public sector oil marketing companies fell as crude oil prices rose. Indian Oil Corporation (down 0.65%), HPCL (down 1.30%) and BPCL (down 0.66%) edged lower. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
Shares of aviation firms fell as crude oil prices rose. InterGlobe Aviation (down 0.03%), Jet Airways (India) (down 1.47%) and SpiceJet (down 3.99%) declined. Higher crude oil prices adversely affect aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.
Global crude oil prices edged higher after a weekly report from the US government yesterday, 25 May 2016, showed a decline in US crude production and inventories. Brent for July settlement was currently up 38 cents at $50.12 a barrel. The contract had rise $1.13 a barrel or 2.32% to settle at $49.74 a barrel during the previous trading session. The US Energy Information Administration said crude inventories fell 4.2 million barrels in the week to 20 May 2016.
State-run natural gas company GAIL (India) gained 1.15% after the company reported 50.75% rise in net profit to Rs 769.99 crore on 17.73% fall in total income to Rs 11952.82 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 25 May 2016.
GAIL (India) said that the increase in net profit during Q4 March 2016 was mainly due to increase in natural gas sales and transmission volumes. Revenues from natural gas transmission business increased by 11% to Rs 1028 crore in Q4 March 2016 over Q4 March 2015. Natural gas sales rose 8% to 74.41 million metric standard cubic meter per day (MMSCMD) in Q4 March 2016 over Q4 March 2015. Natural gas transmission volumes rose 11% to 95.31 MMSCMD in Q4 March 2016 over Q4 March 2015.
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.
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