Sensex hovers around 28,300; BSE Midcap index up 0.5%

A bout of volatility was witnessed in afternoon trade as key benchmark indices trimmed losses after hitting fresh intraday low. At 14:02 IST, the S&P BSE Sensex was down 44 points or 0.2% at 28,290. Weakness in global stocks weighed on sentiment. However, buying was witnessed in select mid-cap and small-cap stocks.

Key indices were trading in red since morning trade after hitting over one-week high at onset of the day's trading session after the International Monetary Fund (IMF) raised India's growth forecast slightly. The Sensex rose 143.10 points or 0.51% at the day's high of 28,477.65 at onset of the day's trading session, its highest level since 26 September 2016.

The barometer index lost 125.36 points or 0.44% at the day's low of 28,209.19 in afternoon trade, its lowest level since 3 October 2016. The Nifty rose 37.80 points or 0.43% at the day's high of 8,806.95 at onset of the day's trading session, its highest level since 26 September 2016. The index lost 37.75 points or 0.43% at the day's low of 8,731.40 in afternoon trade.

In overseas stock markets, European stocks declined as markets digest hawkish comments from US Federal Reserve officials. Most Asian stocks dropped as concern shifted to the likelihood of a US Federal Reserve rate increase by the year's end. Mainland Chinese markets remained closed for the National Day holiday. US stocks closed lower yesterday, 4 October 2016 as investors digested data from the International Monetary Fund and remarks from a Federal Reserve official. Federal Reserve Bank of Richmond President Jeffrey Lacker stating that the central bank should pre-emptively raise short-term interest rates to stave off accelerating inflation.

Closer home, the market breadth indicating the overall health of the market was strong. On BSE, 1,589 shares gained and 1,030 shares fell. A total of 119 shares were unchanged. The BSE Mid-Cap index was up 0.3%. The BSE Small-Cap index was up 0.49%. Both these indices outperformed the Sensex.

Auto stocks were mixed. Mahindra & Mahindra (M&M) (down 1.25%), Hero MotoCorp (down 1.01%), Eicher Motors (down 0.37%), Bajaj Auto (down 1.22%), and TVS Motor Company (down 0.11%) declined. Ashok Leyland (up 0.12%) and Tata Motors (up 0.7%) and gained.

Maruti Suzuki India rose 0.8% after the company said its total production rose 24% to 1.46 lakh units in September 2016 over September 2015. The announcement was made after market hours yesterday, 4 October 2016. Earlier this month, Maruti Suzuki India had announced that its total sales jumped 31.1% to 1.49 lakh units in September 2016 over September 2015. Domestic sales surged 29.4% to 1.37 lakh units in September 2016 over September 2015. Exports jumped 54% to 11,822 units in September 2016 over September 2015.

Capital goods stocks were also mixed. Bharat Heavy Electricals (Bhel) (down 1.38%), Havells India (down 0.54%), and ABB India (down 0.1%) declined. Bharat Electronics (up 0.2%), L&T (up 0.41%), Thermax (up 2.59%), and Siemens (up 0.17%) gained.

Alembic Pharmaceuticals rose 3.32% after the company said that its formulation facility located at Panelav in Gujarat has received Establishment Inspection Report (EIR) from US Food & Drug Administration (USFDA) for the inspection carried out by them in March 2016. The announcement was made during trading hours today, 5 October 2016.

Motherson Sumi Systems rose 0.96% on reports that a foreign brokerage has initiated coverage on the stock with a buy rating. The foreign brokerage reportedly said that the passenger vehicle recovery would drive domestic business for Motherson Sumi Systems. The company's strong order book offers visibility on overseas business, it added. Motherson's FY 2019 earnings per share (EPS) estimates are 12% ahead of consensus, it further added. The brokerage sees further value-accretion for the company through acquisitions.

On macro front, data showed today, 5 October 2016, that the health of the Indian private sector economy improved in September, but to a lesser extent than in August. Output and new business increased at softer rates in both the manufacturing and service sectors. Meanwhile, prices charged were raised in line with higher cost burdens.

Reflecting softer expansions in activity at both service providers and manufacturers, the seasonally adjusted Nikkei India Composite PMI Output Index fell from August's 42-month high of 54.6 to 52.4 in September. Nonetheless, the latest above-50 reading was the fifteenth in as many months, highlighting ongoing growth in the country. The headline seasonally adjusted Nikkei India Services Business Activity Index registered 52 in September down from August's 43-month high of 54.7, thus the latest reading pointing to a slower rate of expansion that was moderate overall.

Global economic growth will remain subdued this year following a slowdown in the United States and Britain's vote to leave the European Union, the IMF said in its October 2016 World Economic Outlook yesterday, 4 October 2016. The world economy will expand 3.1% this year, the IMF said, unchanged from its July projection.

Meanwhile, the International Monetary Fund (IMF) has raised India's growth forecast a tad, citing the resilience of its economy and robust growth momentum. The IMF now expects the economy to expand 7.6% in 2016-17, up from its earlier projection of 7.4%.

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