Metal, auto, banking sector stocks and index heavyweights HDFC, L&T and Reliance Industries (RIL) led rally for key benchmark indices. The barometer index, the S&P BSE Sensex, surged 573.82 points or 2.19% at 26,794.77, as per the provisional closing data. The 50-unit CNX Nifty jumped 174.55 points or 2.2% at 8,125.45, as per the provisional closing data. The Nifty surged past the psychological 8,000 level. The rally on the domestic bourses was a part of the rally in global stocks triggered by expectations that the US Federal Reserve will delay the first interest rate hike in almost a decade in the wake of a weak US jobs data for September 2015.
The Sensex surged 601.47 points or 2.29% at the day's high of 26,822.42 in late trade, its highest level in more than six weeks. The Nifty also hit its highest level in more than six weeks when it jumped 178 points or 2.23% at the day's high of 8,128.90 in late trade.
The market sentiment was upbeat as a number of commercial banks have announced a reduction in their base rate during the past few days in the wake of a steeper-than-expected 50 basis points cut in the repo rate announced by the Reserve Bank of India (RBI) after a regular monetary policy review early last week. The base rate is the minimum lending rate charged by a bank. Banks add their spread to the base rate in pricing loans to customers. The reduction in the base rate will bring down interest costs on working capital loans in the coming months.
The rally on the bourses was broad based. There were more than two gainers against every loser on BSE. 1,996 shares rose and 800 shares declined. A total of 96 shares were unchanged. The BSE Mid-Cap index was up 1.79%. The BSE Small-Cap index was up 1.62%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 3027 crore, higher than turnover of Rs 2937.39 crore registered during the previous trading session.
Index heavyweight and engineering and construction major L&T advanced 4.28% to Rs 1,553. The stock hit high of Rs 1,554 and low of Rs 1,505.
Bank stocks edged higher on renewed buying. Among public sector banks, UCO Bank (up 3.93%), Syndicate Bank (up 6.12%), Punjab National Bank (up 2.83%), Allahabad Bank (up 2.33%), Bank of Baroda (up 3.09%), State Bank of India (SBI) (up 2%), Canara Bank (up 3.95%), and Bank of India (up 3.72%) edged higher.
Corporation Bank gained 1.15%. The bank said during market hours today, 5 October 2015, that it has reduced the base rate for lending by 20 basis points from 9.9% per annum (p.a.) to 9.7% p.a. with effect from 8 October 2015. The base rate is the minimum lending rate charged by a bank.
United Bank of India gained 1.83%. The bank on Saturday, 3 October 2015, said it has decided to reduce its base rate by 25 basis points to 9.65% from 9.9% with effect from 5 October 2015. The bank has also reduced interest rate on domestic term deposits under various maturity buckets by 25 to 50 basis points.
Union Bank of India rose 5.03% after the bank announced that its board on 26 August 2015 approved purchase of 49% stake in Union KBC Asset Management and Union KBC Trustee Company from KBC Participations Renta. Union KBC Asset Management and Union KBC Trustee Company operate the mutual funds businesses. KBC Participations Renta is a group company of Luxembourg-based KBC Asset Management NV. The announcement was made during trading hours today, 5 October 2015.
Union Bank of India and KBC Asset Management NV had formed two joint ventures - Union KBC Asset Management Company and Union KBC Trustee Company - in 2009 with 51% and 49% holding, respectively. After this acquisition, both Union KBC Asset Management and Union KBC Trustee Company will become wholly-owned subsidiaries of Union Bank of India.
In a separate announcement on Saturday, 3 October 2015, Union Bank of India said that consequent to the receipt of capital funds from Government of India (GoI) to the tune of Rs 1079.99 crore, the bank on 30 September 2015 allotted 5.16 crore equity shares of Rs 10 each for cash at an issue price of Rs 209.05 per equity share on preferential basis to the GoI.
ICICI Bank rose 4.96% after the bank announced a reduction of 35 basis points in its base rate to 9.35% per annum from 9.7% with effect from 5 October 2015. The base rate is the minimum lending rate charged by a bank.
Index heavyweight Reliance Industries (RIL) gained 2.98% to Rs 888. The stock hit high of Rs 888.80 and low of Rs 862.50.
HDFC gained 4.64%. The company said on Saturday, 3 October 2015, that the board of directors has accorded approval to issue of 3.65 crore warrants to the qualified institutional buyers (QIBs) at an issue price of Rs 14 per warrant. Each warrant is exchangeable with one equity share of the company at a warrant exercise price of Rs 1,475 per share. The issue price of Rs 14 per warrant is neither adjustable with the warrant exercise price nor refundable by the company. The issue of warrants is attached to the issue of non convertible debentures (NCDs) aggregating Rs 5000 crore to the QIBs. The NCDs carry a coupon of 1.43% and due for maturity in March 2017.
HDFC also announced that the company's profit on sale of investments fell 53.39% to Rs 48 crore in Q2 September 2015 over Q2 September 2014. Income from dividend jumped 308.65% to Rs 425 crore in Q2 September 2015 over Q2 September 2014. The company under the loan assignment route sold loans amounting to Rs 2864 crore to HDFC Bank in Q2 September 2015, which was much higher than the figure of Rs 844 crore in Q2 September 2014.
Ahluwalia Contracts (India) rose 0.3% after the company said it has secured new orders aggregating to Rs 220.47 crore. The company announced the new orders during market hours today, 5 October 2015.
In overseas stock markets, European stocks surged as weak US employment data fueled speculation the US Federal Reserve won't increase interest rates this year. Asian stocks edged higher on expectations Beijing will take steps to accelerate growth and as prospects of a near-term interest rate hike by the Federal Reserve ebbed in the wake of last week's weaker-than-expected US employment data for September 2015. The possibility of the Fed delaying the lift-off date for rates also meant its loose policy, which has helped shore up risk assets globally by providing cheap cash, would continue a little longer. The US central bank has kept interest rates near zero since the end of 2008 in an effort to stoke economic growth in the aftermath of the global financial crisis. US stocks closed on a positive note during the previous trading session on Friday, 2 October 2015, thanks to a late-afternoon rally, but a weak US jobs report added to worries that the economy is slowing.
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