Amid a divergent trend among various index constituents, key benchmark indices clocked modest gains. The barometer index, the S&P BSE Sensex, rose 103.34 points or 0.4% at 25,756.57, as per the provisional closing data. The Nifty 50 index rose 30 points or 0.38% at 7,890.75, as per the provisional closing data. The market witnessed intraday volatility during the second half of the trading session. After extending gains in mid-afternoon trade, the Sensex and the Nifty pared gains later. The volatility on the domestic bourses during the second half of the trading session materialized as European stocks pared gains. On the political front, various exit polls predicted a maiden win for the BJP led National Democratic Alliance (NDA) in assembly election in Assam.
The Sensex and the Nifty remained in positive zone throughout the trading session after opening with upward gap. The two benchmark indices edged higher for second day in a row.
The Sensex jumped 274.08 points or 1.06% at the day's high of 25,927.31 in mid-afternoon trade, its highest level since 28 April 2016. The barometer index rose 80.53 points or 0.31% at the day's low of 25,733.76 in late trade. The Nifty jumped 79.35 points or 1% at the day's high of 7,940.10 in mid-afternoon trade, its highest level since 28 April 2016. The index rose 18.95 points or 0.24% at the day's low of 7,879.70 .20 in late trade.
In overseas stock markets, European stocks pared gains as crude oil prices reversed gains. Brent crude for July 2016 delivery was currently off 0.39% at $48.78 a barrel. The oil price has gained over the last week on the back of continued supply disruptions and bullish analyst forecasts, with Brent, the global crude benchmark, hitting a near seven month high yesterday, 16 May 2016.
Energy stocks led gains in Asian equities after increase in crude oil prices overnight. US stocks edged higher yesterday, 16 May 2016, as a surge in oil prices and a rally in tech stocks overshadowed weaker-than-expected manufacturing data from the New York region. The Empire State general business-conditions index, which measures activity in the New York area, nosedived to a reading of negative 9 in early May, from positive 9.6 in April.
Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 1,305 shares rose and 1,302 shares fell. A total of 179 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.13%. The BSE Small-Cap index was provisionally up 0.19%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2602 crore, higher than turnover of Rs 2260.38 crore registered during the previous trading session.
Index heavyweight and housing finance major HDFC advanced 2% to Rs 1,211. The stock hit high of Rs 1,228.80 and low of Rs 1,193 in intraday trade. HDFC has filed term sheet for issuing secured redeemable non-convertible debentures worth Rs 1500 crore on private placement basis. HDFC said that the coupon rate on debentures is 8.45% per annum. The tenor of the debentures is ten years, with redemption date being 18 May 2026. The issue opens and closes on the same day on 18 May 2016. The object of the issue is to augment long term resources of the company, HDFC said. The proceeds of the issue would be utilized for financing/refinancing the housing finance business requirements of the company. The announcement was made during market hours today, 17 May 2016.
HDFC Bank fell 0.8% to Rs 1,153.75. The stock hit a low of Rs 1,151.40 in intraday trade. The stock hit a high of Rs 1,178 in intraday trade, which is a record high for the counter.
Shares of Tata Steel fell 0.11%. Tata Metaliks was locked at 20% upper circuit at Rs 140.40. Tata Steel has decided to file an application before the Bombay High Court seeking withdrawal of the court's earlier order sanctioning merger of Tata Metaliks with Tata Steel. The swap ratio for the merger was fixed at four equity shares of Tata Steel for every 29 equity shares held in Tata Metaliks. Koushik Chatterjee, Group Executive Director (Finance and Corporate) Tata Steel said that the decision to withdraw the merger proposal is based on careful consideration of various factors including, inordinate delay in obtaining requisite regulatory and statutory approvals along with significant dilution in the intended synergies from the merger that were envisaged in April 2013. Tata Steel continues to strategically support Tata Metaliks in its journey towards making it a profitable and value creating company for the future, Chatterjee said. With the latest decision, Tata Metaliks will continue to operate as a subsidiary company of Tata Steel, he added.
Tata Steel holds 50.09% stake in Tata Metaliks as per the shareholding pattern as on 31 March 2016.
Car major Maruti Suzuki India rose 1.54% as the Japanese yen weakened against the dollar. A weak yen lifts Maruti's operating profit margin. Maruti pays royalty to its Japanese parent Suzuki Motor Corporation in yen terms for some of its earlier models. As per recent media reports, Maruti will start paying royalty to its Japanese parent in rupee term on all new models from the current financial year, which began on 1 April 2016. Maruti also has an exposure to the yen to the extent it imports raw materials from Japan.
Meanwhile, with a view to aid the development of corporate bond market, the Reserve Bank of India in consultation with the Ministry of Finance has decided to allow investment by foreign portfolio investors (FPIs) in unlisted debt securities and securitised debt instruments subject to certain restrictions. In a draft circular issued yesterday, 16 May 2016, the RBI said that FPIs can invest in the primary issues of non-convertible debentures/bonds by a public company issued in demat form, provided that the issuing company does not use the borrowing proceeds for real estate activities, purchase of land, investing in capital market or on-lending to other entities. FPIs can also invest in securitised debt instruments issued by a special purpose vehicle (SPV) set up for securitisation of assets where banks, FIs or NBFCs are originators. FPIs can also invest in securitised debt instruments issued and listed in terms of the Securities and Exchange Board of India Regulations on Public Offer and Listing of Securitised Debt Instruments, 2008. The RBI has invited public comments on draft circular by 25 May 2016.
On the political front, various exit polls predicted a victory for the Dravida Munnetra Kazhagam (DMK)-Congress alliance in assembly elections in Tamil Nadu, a victory for Communist Party of India-Marxist (CPM)-led Left Democratic Front government in Kerala assembly elections and a maiden win for the BJP led National Democratic Alliance (NDA) in Assam assembly elections. The exit polls predicted victory for West Bengal Chief Minister Mamata Banerjee in assembly elections that state. The Congress-DMK alliance looks set to form government in the Union territory of Puducherry, the post-poll surveys indicated. The counting of votes for assembly elections held in these four states and the Union territory of Puducherry takes place on Thursday, 19 May 2016.
A win for the BJP led NDA in Assam will put BJP in the right shape for the 2017 assembly election in Uttar Pradesh (UP). The UP assembly has 403 seats. The number of seats in Rajya Sabha, or the upper house of parliament, depends on representation in states. A lack of a majority for the NDA in the Rajya Sabha has delayed passage of a key tax reform bill viz. the Goods and Services Tax (GST) bill in the upper house. Finance Minister Arun Jaitley said in an interview to All India Radio recently that the GST Bill will be put to vote in the monsoon session of Parliament if Congress continues to oppose the Legislation. The GST bill, which has been approved by the Lok Sabha, is pending in the Rajya Sabha because of stiff resistance by the Congress. For the GST bill to become a law, the GST bill also needs to be approved by half the state assemblies.
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