Sensex rises 378 pts, auto shares in demand

The benchmark indices marched higher and hit the day`s high in mid-morning trade. The Nifty traded above the 18,600 level. Auto stocks witnessed buying demand for the fourth trading session.

At 11:30 IST, the barometer index, the S&P BSE Sensex, was up 378.06 points or 0.60% to 62,925.17. The Nifty 50 index gained 100.25 points or 0.54% to 18,634.35.

In the broader market, the S&P BSE Mid-Cap index added 0.41% while the S&P BSE Small-Cap index rose 0.66%.

The market breadth was strong. On the BSE, 2,282 shares rose and 1,204 shares fell. A total of 173 shares were unchanged.

The Reserve Bank of India (RBI)`s six-member Monetary Policy Committee is scheduled to meet this week during 6-8 June 2023. RBI Governor Shaktikanta Das will announce the MPC decision on Thursday, 8 June 2023, the last date of the meeting.

Economy:

Posting 61.2 in May, the seasonally adjusted S&P Global India Services PMI Business Activity Index highlighted a further expansion in output across the sector. Despite falling from 62.0 in April, the latest reading indicated the second strongest rate of growth in just under 13 years. Favorable demand conditions, new client wins and positive market dynamics reportedly supported output.

Meanwhile, India`s foreign exchange reserves fell for a second consecutive week and stood at a one-month low of $589.14 billion as of May 26, the Reserve Bank of India`s (RBI) data showed on Friday. That was a decrease of $4.34 billion from the previous week. For the week ended May 26, the foreign currency assets, a major component of the reserves, declined by $4.014 billion to $520.931 billion, according to the Weekly Statistical Supplement released by the RBI.

Gold reserves dropped by $225 million to $44.902 billion, the RBI said. The Special Drawing Rights (SDRs) were down by $84 million to $18.192 billion, the apex bank said. The country`s reserve position with the IMF was down by $17 million to $5.113 billion in the reporting week, the apex bank data showed.

Buzzing Index:

The Nifty Auto index rose 1.25% to 14,568.10. The index gained 2.75% in four trading sessions.

Mahindra & Mahindra (up 3.12%), Ashok Leyland (up 2.09%), Tata Motors (up 1.61%), Maruti Suzuki India (up 1.61%), Samvardhana Motherson International (up 1.18%), Bosch (up 0.78%), Bharat Forge (up 0.71%), Tube Investments of India (up 0.61%), MRF (up 0.46%) and Bajaj Auto (up 0.39%) edged higher.

On the other hand, Balkrishna Industries (down 0.88%), TVS Motor Company (down 0.67%) and Sona BLW Precision Forgings (down 0.4%) declined.

Stocks in Spotlight:

Indian Overseas Bank (IOB) fell 0.99%. The bank informed that the Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2.20 crore for non-compliance with certain directions issued by RBI.IOB failed to make minimum mandatory transfer of a sum equivalent to 25% of its disclosed profit for the year 2020-21 to its reserve fund and there was significant divergence between the NPAs, as reported by it and as assessed by the inspection.

Ramco Systems gained 2.42% after the company announced that it has inaugurated its wholly owned subsidiary in Qatar to support digital transformation initiatives across the region.

Greenply Industries shed 0.18%. The company said that its board has approved the disposal and/or discardment of properties, plant & equipment and other current assets of Greenply Industries (Myanmar) Private Limited, a subsidiary of Greenply Alkemal (Singapore) Pte. Ltd.

Global Markets:

Most of the Asian stocks were trading higher on Monday on optimism the Federal Reserve would pause its rate hikes this month after a mixed U.S. jobs report, while oil jumped as Saudi Arabia pledged big output cuts in July.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, on Sunday made no changes to its planned oil production cuts for this year, as coalition chair Saudi Arabia announced further voluntary declines. Oil prices rose after OPEC kingpin Saudi Arabia decided to cut production by another million barrels per day. OPEC+ also announced in a statement that it will limit combined oil production to 40.463 million barrels per day over January-December 2024.

China`s services activity picked up in May, a private-sector survey showed on Monday. The Caixin/S&P Global services purchasing managers` index (PMI) rose to 57.1 in May from 56.4 in April. The 50-point mark separates expansion from contraction in activity.

Japan`s service sector saw a record rate of expansion in May, according to private surveys by au Jibun bank. The country`s services purchasing managers` index came in at 55.9, surpassing the previous record of 55.4 set last month and extending its streak to six straight months of quickening expansion.

US stocks closed higher on Friday after a labor market report showing moderating wage growth in May indicated the Federal Reserve may skip a rate hike in two weeks, while investors welcomed a Washington deal that avoided a catastrophic debt default. U.S. President Joe Biden signed into law a debt ceiling bill that allowed the U.S. to avert defaulting on its financial obligations over the weekend.

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