Benchmark indices vault on rate cut hopes as CPI eases to 6-month low
Trading for the truncated trading week ended on an upbeat note as key benchmark indices surged on the back of a confluence of positive factors viz. forecast of good rains during the June-September 2016 southwest monsoon season, 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 aided the latest rally on the domestic bourses. The barometer index, the S&P BSE Sensex, jumped 481.16 points or 1.91% to settle at 25,626.75. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty gained 141.50 points or 1.84% to settle at 7,850.45. Auto, metal, cement stocks and index heavyweights HDFC, HDFC Bank, ITC and Reliance Industries (RIL) led the rally for the key benchmark indices.
The Sensex and the Nifty remained in green throughout the trading session after opening with upward gap. The Sensex gained for the third day in a row and the Nifty edged higher for the fourth day in a row. The latest rally took the two key benchmark indices to their highest closing level in almost 15 weeks.
Interest rate sensitive auto and banking stocks gained on hopes that the Reserve Bank of India could ease interest rates further after latest data showed that consumer price inflation eased to a six-month low in March. Maruti Suzuki India extended gains registered during the previous trading session as the Japanese yen moved further off a 17-month high against the dollar. Axis Bank edged higher after private sector bank announced reduction in its lending rates. Metal and mining stocks edged higher after better than expected March trade data from China.
Index heavyweight and IT major Infosys dropped ahead of the announcement of its fourth quarter earnings. Wipro edged higher after the company's announcement that its board of directors will consider a proposal for buyback of equity shares of the company at its meeting on 20 April 2016.
In overseas stock markets, Asian and European stocks edged higher after the latest data showed stronger-than-expected growth in China's exports. China is the world's second biggest economy after the United States. In mainland China, the Shanghai Composite settled 1.44% higher. In Hong Kong, the Hang Seng index closed 3.19% higher. China's exports rose 11.5% in March year-over-year in dollar terms. Imports declined 7.6%, compared with February's 13.8% drop. Japanese stocks rose as the yen weakened against the dollar. The Nikkei 225 Average settled 2.84% higher. The yen has weakened after hitting 17-month high against the dollar early this week. Strength in the local currency hurts the competitiveness of Japanese exporters.
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.
The Sensex jumped 481.16 points or 1.91% to settle at 25,626.75, its highest closing level in 1 January 2016. The index jumped 525.91 points or 2.09% at the day's high of 25,671.50. The index gained 212.83 points or 0.84% at the day's low of 25,358.42.
The Nifty gained 141.50 points or 1.84% to settle at 7,850.45, its highest closing level in 1 January 2016. The index surged 155.85 points or 2.02% at the day's high of 7,864.80. The index rose 63.25 points or 0.82% at the day's low of 7,772.20.
The market breadth indicating the overall health of the market was positive. On BSE, 1,591 shares rose and 1,091 shares fell. A total of 160 shares were unchanged. The BSE Mid-Cap index gained 0.91%. The BSE Small-Cap index rose 1.06%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2630 crore, higher than turnover of Rs 2466.46 crore registered during the previous trading session.
Auto stocks extended gains registered during the previous trading session on hopes that the Reserve Bank of India could ease interest rates further after the latest data showed that consumer price inflation eased to a six-month low in March. Eicher Motors (up 1.9%), and Tata Motors (up 3.32%) gained. Ashok Leyland declined 1.17%. Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Shares of tractor manufacturer Mahindra & Mahindra (M&M) jumped 7.51% at Rs 1,334 after India Meteorological Department (IMD) in its initial 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 2.31%), Bajaj Auto (up 4.51%) and Hero MotoCorp (up 3.77%) edged higher. A good monsoon could boost rural incomes, which in turn could boost sales of two-wheeler makers in rural India.
Maruti Suzuki India extended gains registered during the previous trading session as the Japanese yen moved further off a 17-month high against the dollar. The stock gained 4.7%. The Maruti stock had tumbled recently after the yen strengthened against the dollar. A strong yen adversely impacts Maruti's operating profit margin.
Metal and mining stocks edged higher after better than expected March trade data from China. Hindalco Industries (up 4.79%), Jindal Steel & Power (up 3.97%), Vedanta (up 3.59%), Hindustan Zinc (up 3.69%), Tata Steel (up 2.61%), Steel Authority of India (up 1.96%), Hindustan Copper (up 1.17%), National Aluminium Company (up 5.1%), JSW Steel (up 1.15%) and NMDC (up 0.3%) rose. China is the world's largest consumer of steel, copper and aluminum.
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.
Meanwhile, High Grade Copper for May 2016 delivery was currently up 0.33% at $2.154 per pound on the COMEX.
Index heavyweight and IT major Infosys dropped 0.87% at Rs 1,172.05 ahead of the announcement of its fourth quarter earnings. The stock hit a high of Rs 1,195 and a low of Rs 1,166.50 in intraday trade. Infosys is scheduled to announce its Q4 March 2016 result on Friday, 15 April 2016, when the stock market is closed for a holiday.
Wipro rose after the company after market hours yesterday, 12 April 2016, announced that the company's board of directors will consider a proposal for buyback of equity shares of the company at its meeting on 20 April 2016. The stock rose 2.89% at Rs 584.60. Wipro is scheduled to announce its Q4 March 2016 results after trading hours on 20 April 2016.
FMCG stocks gained after India's weather department predicted good rains during the June-September 2016 southwest season. Tata Global Beverages (up 1.82%), Britannia Industries (up 1.65%), Jyothy Laboratories (up 0.03%), Procter & Gamble Hygiene and Health Care (up 0.33%), Hindustan Unilever (HUL) (up 2.85%), Dabur India (up 2.01%), Colgate Palmolive India (up 1.68%) and Godrej Consumer Products (up 2.02%) gained. Nestle India (down 0.49%), Marico (down 2.48%), GlaxoSmithkline Consumer Healthcare (down 0.73%) and Bajaj Corp (down 4.22%) declined. FMCG firms derive substantial revenue from rural India.
Index heavyweight and cigarette major ITC rose 2.57% to Rs 330.95. The stock hit high of Rs 332.25 and low of Rs 323.90 in intraday trade.
Cement stocks edged higher on renewed buying. ACC (up 1.6%), Ambuja Cements (up 3.11%), Shree Cement (up 2.1%) and UltraTech Cement (up 3.5%) gained.
Grasim Industries rose 1%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Bank stocks gained on hopes that the Reserve Bank of India could ease interest rates further after latest data showed that consumer price inflation eased to a six-month low in March. Among public sector banks, Punjab National Bank (up 1.32%), Bank of Baroda (up 2.25%), State Bank of India (SBI) (up 2.16%), Union Bank of India (up 1.98%), Canara Bank (up 1.19%) and Bank of India (up 0.8%) edged higher.
Among private sector banks, HDFC Bank (up 1.62%), ICICI Bank (up 5.4%), Kotak Mahindra Bank (up 2.24%), and Yes Bank (up 1.17%) edged higher.
Axis Bank edged higher after private sector bank before market hours today, 13 April 2016, announced reduction in its lending rates. The stock gained 1.66%. Axis 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. While retaining the accommodative stance of the monetary policy, RBI Governor Raghuram Rajan indicated in his monetary policy statement that the RBI may cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut.
IndusInd Bank rose 1.98%. The bank during market hours today, 13 April 2016, announced that it has inaugurated a new branch at Jajodia Complex, Lahkothi, Ratu Road, Ranchi, Jharkhand. The bank has plans to further strengthen its presence and customer reach in Jharkhand with more launches in the coming quarters.
Index heavyweight and housing finance major HDFC gained 2.17% to Rs 1,113.20. The stock hit high of Rs 1,116.50 and low of Rs 1,097 so far during the day.
Index heavyweight Reliance Industries (RIL) rose 1.75% to Rs 1,065.45. The stock hit high of Rs 1,068.30 and low of Rs 1,052 so far during the day.
The Sensex rose for the third straight day. The barometer index has risen 952.91 points or 3.86% in three trading sessions from its close of 24,673.84 on 8 April 2016. The Sensex has risen 284.89 points or 1.12% in this month so far (till 13 April 2016). The Sensex has fallen 490.79 points or 1.87% in calendar year 2016 so far (till 13 April 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 3,132.14 points or 13.92%. The Sensex is off 3,467.86 points or 11.91% from a 52-week high of 29,094.61 hit on 15 April 2015. The Sensex is off 4,397.99 points or 14.64% from a record high of 30,024.74 hit on 4 March 2015.
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%. According to the weather office, there is 34% probability of above normal rains, 30% probability each of excess and normal rains, 5% probability of below normal rains and 1% probability of deficient rains. 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.
On the macro front, the latest 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. The core CPI inflation fell to 4.54% in March 2016 from 4.79% in February 2016.
Another data showed that 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. Both the CPI and industrial production data were announced after market hours yesterday, 12 April 2016.
The latest rally on the domestic bourses comes ahead of a long weekend. India's stock market remains closed tomorrow, 14 April 2016, on account of Dr. Baba Saheb Ambedkar Jayanti and again on Friday, 15 April 2016, on account of Ram Navami.
The Sensex and the Nifty remained in green throughout the trading session after opening with upward gap. The Sensex gained for the third day in a row and the Nifty edged higher for the fourth day in a row. The latest rally took the two key benchmark indices to their highest closing level in almost 15 weeks.
Interest rate sensitive auto and banking stocks gained on hopes that the Reserve Bank of India could ease interest rates further after latest data showed that consumer price inflation eased to a six-month low in March. Maruti Suzuki India extended gains registered during the previous trading session as the Japanese yen moved further off a 17-month high against the dollar. Axis Bank edged higher after private sector bank announced reduction in its lending rates. Metal and mining stocks edged higher after better than expected March trade data from China.
Index heavyweight and IT major Infosys dropped ahead of the announcement of its fourth quarter earnings. Wipro edged higher after the company's announcement that its board of directors will consider a proposal for buyback of equity shares of the company at its meeting on 20 April 2016.
In overseas stock markets, Asian and European stocks edged higher after the latest data showed stronger-than-expected growth in China's exports. China is the world's second biggest economy after the United States. In mainland China, the Shanghai Composite settled 1.44% higher. In Hong Kong, the Hang Seng index closed 3.19% higher. China's exports rose 11.5% in March year-over-year in dollar terms. Imports declined 7.6%, compared with February's 13.8% drop. Japanese stocks rose as the yen weakened against the dollar. The Nikkei 225 Average settled 2.84% higher. The yen has weakened after hitting 17-month high against the dollar early this week. Strength in the local currency hurts the competitiveness of Japanese exporters.
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.
The Sensex jumped 481.16 points or 1.91% to settle at 25,626.75, its highest closing level in 1 January 2016. The index jumped 525.91 points or 2.09% at the day's high of 25,671.50. The index gained 212.83 points or 0.84% at the day's low of 25,358.42.
The Nifty gained 141.50 points or 1.84% to settle at 7,850.45, its highest closing level in 1 January 2016. The index surged 155.85 points or 2.02% at the day's high of 7,864.80. The index rose 63.25 points or 0.82% at the day's low of 7,772.20.
The market breadth indicating the overall health of the market was positive. On BSE, 1,591 shares rose and 1,091 shares fell. A total of 160 shares were unchanged. The BSE Mid-Cap index gained 0.91%. The BSE Small-Cap index rose 1.06%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 2630 crore, higher than turnover of Rs 2466.46 crore registered during the previous trading session.
Auto stocks extended gains registered during the previous trading session on hopes that the Reserve Bank of India could ease interest rates further after the latest data showed that consumer price inflation eased to a six-month low in March. Eicher Motors (up 1.9%), and Tata Motors (up 3.32%) gained. Ashok Leyland declined 1.17%. Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
Shares of tractor manufacturer Mahindra & Mahindra (M&M) jumped 7.51% at Rs 1,334 after India Meteorological Department (IMD) in its initial 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 2.31%), Bajaj Auto (up 4.51%) and Hero MotoCorp (up 3.77%) edged higher. A good monsoon could boost rural incomes, which in turn could boost sales of two-wheeler makers in rural India.
Maruti Suzuki India extended gains registered during the previous trading session as the Japanese yen moved further off a 17-month high against the dollar. The stock gained 4.7%. The Maruti stock had tumbled recently after the yen strengthened against the dollar. A strong yen adversely impacts Maruti's operating profit margin.
Metal and mining stocks edged higher after better than expected March trade data from China. Hindalco Industries (up 4.79%), Jindal Steel & Power (up 3.97%), Vedanta (up 3.59%), Hindustan Zinc (up 3.69%), Tata Steel (up 2.61%), Steel Authority of India (up 1.96%), Hindustan Copper (up 1.17%), National Aluminium Company (up 5.1%), JSW Steel (up 1.15%) and NMDC (up 0.3%) rose. China is the world's largest consumer of steel, copper and aluminum.
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.
Meanwhile, High Grade Copper for May 2016 delivery was currently up 0.33% at $2.154 per pound on the COMEX.
Index heavyweight and IT major Infosys dropped 0.87% at Rs 1,172.05 ahead of the announcement of its fourth quarter earnings. The stock hit a high of Rs 1,195 and a low of Rs 1,166.50 in intraday trade. Infosys is scheduled to announce its Q4 March 2016 result on Friday, 15 April 2016, when the stock market is closed for a holiday.
Wipro rose after the company after market hours yesterday, 12 April 2016, announced that the company's board of directors will consider a proposal for buyback of equity shares of the company at its meeting on 20 April 2016. The stock rose 2.89% at Rs 584.60. Wipro is scheduled to announce its Q4 March 2016 results after trading hours on 20 April 2016.
FMCG stocks gained after India's weather department predicted good rains during the June-September 2016 southwest season. Tata Global Beverages (up 1.82%), Britannia Industries (up 1.65%), Jyothy Laboratories (up 0.03%), Procter & Gamble Hygiene and Health Care (up 0.33%), Hindustan Unilever (HUL) (up 2.85%), Dabur India (up 2.01%), Colgate Palmolive India (up 1.68%) and Godrej Consumer Products (up 2.02%) gained. Nestle India (down 0.49%), Marico (down 2.48%), GlaxoSmithkline Consumer Healthcare (down 0.73%) and Bajaj Corp (down 4.22%) declined. FMCG firms derive substantial revenue from rural India.
Index heavyweight and cigarette major ITC rose 2.57% to Rs 330.95. The stock hit high of Rs 332.25 and low of Rs 323.90 in intraday trade.
Cement stocks edged higher on renewed buying. ACC (up 1.6%), Ambuja Cements (up 3.11%), Shree Cement (up 2.1%) and UltraTech Cement (up 3.5%) gained.
Grasim Industries rose 1%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
Bank stocks gained on hopes that the Reserve Bank of India could ease interest rates further after latest data showed that consumer price inflation eased to a six-month low in March. Among public sector banks, Punjab National Bank (up 1.32%), Bank of Baroda (up 2.25%), State Bank of India (SBI) (up 2.16%), Union Bank of India (up 1.98%), Canara Bank (up 1.19%) and Bank of India (up 0.8%) edged higher.
Among private sector banks, HDFC Bank (up 1.62%), ICICI Bank (up 5.4%), Kotak Mahindra Bank (up 2.24%), and Yes Bank (up 1.17%) edged higher.
Axis Bank edged higher after private sector bank before market hours today, 13 April 2016, announced reduction in its lending rates. The stock gained 1.66%. Axis 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. While retaining the accommodative stance of the monetary policy, RBI Governor Raghuram Rajan indicated in his monetary policy statement that the RBI may cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut.
IndusInd Bank rose 1.98%. The bank during market hours today, 13 April 2016, announced that it has inaugurated a new branch at Jajodia Complex, Lahkothi, Ratu Road, Ranchi, Jharkhand. The bank has plans to further strengthen its presence and customer reach in Jharkhand with more launches in the coming quarters.
Index heavyweight and housing finance major HDFC gained 2.17% to Rs 1,113.20. The stock hit high of Rs 1,116.50 and low of Rs 1,097 so far during the day.
Index heavyweight Reliance Industries (RIL) rose 1.75% to Rs 1,065.45. The stock hit high of Rs 1,068.30 and low of Rs 1,052 so far during the day.
The Sensex rose for the third straight day. The barometer index has risen 952.91 points or 3.86% in three trading sessions from its close of 24,673.84 on 8 April 2016. The Sensex has risen 284.89 points or 1.12% in this month so far (till 13 April 2016). The Sensex has fallen 490.79 points or 1.87% in calendar year 2016 so far (till 13 April 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the Sensex has risen 3,132.14 points or 13.92%. The Sensex is off 3,467.86 points or 11.91% from a 52-week high of 29,094.61 hit on 15 April 2015. The Sensex is off 4,397.99 points or 14.64% from a record high of 30,024.74 hit on 4 March 2015.
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%. According to the weather office, there is 34% probability of above normal rains, 30% probability each of excess and normal rains, 5% probability of below normal rains and 1% probability of deficient rains. 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.
On the macro front, the latest 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. The core CPI inflation fell to 4.54% in March 2016 from 4.79% in February 2016.
Another data showed that 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. Both the CPI and industrial production data were announced after market hours yesterday, 12 April 2016.
The latest rally on the domestic bourses comes ahead of a long weekend. India's stock market remains closed tomorrow, 14 April 2016, on account of Dr. Baba Saheb Ambedkar Jayanti and again on Friday, 15 April 2016, on account of Ram Navami.
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