Markets cheered weak growth in US jobs data that dampened prospects of a Fed rate hike
Benchmark share indices surged with the Sensex ending at its highest closing level since April 13, 2015 after slower than expected growth in US jobs data during August dampened the prospects of an early rate hike by the US Federal Reserve. Key indices also posted biggest one day gain in last two months.
The latest rally on the bourses was also triggered by outcome of a monthly survey showing that August saw a solid rebound in the rate of expansion in Indian service sector business activity.
The S&P BSE Sensex surged 446 points to end at 28,978, its highest closing level since April 13, 2015. The Nifty50 zoomed 133 points to close at 8,943, its highest closing level since March 3, 2015. Among broader markets, BSE Midcap and Smallcap indices surged between 1%-2%.
Commenting on today's rally, Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services said, “The long weekend looked to have rejuvenated Indian markets, with Nifty scaling 8,900. Increased money flow and a soft US nonfarm payrolls growth reducing chance of September rate hike has a provided a template for this surge.
With new RBI governor taking charge, all eyes are also now on next week’s CPI data, for chances of a rate cut. Meanwhile, Option traders were also seen taking a bullish stance, with put writing and call buying seen in the 9,000, 9,100 strikes, heightening the chances of overcoming Nifty’s record peak last seen in March 2015."
Meanwhile, Urjit Patel assumed charge as the 24th governor of Reserve Bank of India (RBI), succeeding Raghuram Rajan whose three-year controversy-ridden tenure ended on Sunday, 4 September 2016. Patel has assumed charge effective from Sunday after serving as deputy governor since January 2013, RBI said.
Among overseas markets, Asian shares edged up on Tuesday as investors awaited the Reserve Bank of Australia's policy meeting in which it is expected to keep interest rates steady.
Asian shares also gained as prospects for a US interest-rate increase this month remained subdued. Low US interest rates could support demand for emerging-market assets. Data on Friday showed US employment growth slowed more than expected in August after two straight months of robust gains.
European shares rose slightly on Tuesday and held near their highest levels since April supported on the day by the energy sector and a jump in shares of healthcare firm Fresenius which rose following an acquisition in Spain.
Meanwhile, the Group of 20 major economies (G20) wrapped up their annual summit, held in Hangzhou, China, yesterday, 5 September 2016 with a stronger commitment to coordinate policies to support growth and promote trade liberalisation.
Back home, rate-sensitive sectors mostly banks and autos were the main leaders in trades today. Nifty Bank crossed the psychological level of 20,000 for the first time since March 4, 2015. Metal & mining stocks too gained as copper prices rose in global commodity markets.
Tata Motors, Axis Bank, Tata Steel, Asian Paints and Maruti Suzuki were the top main Sensex 30 gainers, all up between 3%-7%.
Tata Motors has bagged orders worth Rs 900 crore for over 5,000 buses from various state and city transport undertakings in the first five months of the financial year. Shares of Tata Motors zoomed nearly 7%.
Maruti Suzuki gained around 3% after the company announced that its total production rose 3.25% to 1.27 lakh units in August 2016 over August 2015. Shares of Maruti Suzuki hit record high in intra-day trades.
Telecom stocks ended on a mixed note. Reliance Industries rose around 1% after the company’s' telecom arm Reliance Jio Infocomm commenced its wireless telecommunication services with effect from September 5, 2016. Bharti Airtel and Idea Cellular inched up over 0.5% each.
Among other shares, Jubilant FoodWorks slipped nearly 9% after the company reported 31.08% fall in its June quarter net profit to Rs 19 crore, as against Rs 27.57 crore during the previous corresponding quarter.
Reliance Capital rose over 2% after the company announced completion of a fund raising exercise of Rs 2000 crore through private placement of secured redeemable non-convertible debentures.
Shares of Inox Wind dropped over 5% after the company reported sharp drop in net profit for the quarter ended June 30, 2016 on the back of lower sales.
HCC fell over 2% on profit booking after a recent rally. Shares of HCC rose almost 55% in three trading sessions to settle at Rs 35.55 on Friday.