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Strong Finish to Week; Pharma Stocks Rally for Second Consecutive Day
Fri, 2 Jun Closing

Indian share markets continued to trade in green during the afternoon session amid firm international markets. At the closing bell, the BSE Sensex stood higher by 136 points, while the NSE Nifty finished up by 37 points. Meanwhile, the S&P BSE Mid Cap and the S&P BSE Small Cap finished up by 0.7% and 0.5% respectively. Gains were largely seen in realty stocks, pharma stocks and consumer durables' stocks. Metal stocks and oil & gas stocks witnessed selling pressure.

The month of May was witness to a rollercoaster ride for the Indian stock markets. The benchmark indices after making a sluggish start gained momentum to surge to their life time highs and continue the momentum till the end of the month.

BSE Sensex Gainers During the month of May

In the early second half of the month markets showed some choppiness mainly on some weak earnings but hopes of timely arrival of monsoon rains once again led the markets continued to gain. The May F&O series continued to be of jubilation for the Indian markets, with both the Sensex and the Nifty ending the series with a gain of over 1.5% and Nifty managed to reclaim the psychological highs of 9500.

GMR Infrastructure share price rose nearly 20% on reduction in the company's gross debt. GMR Infrastructure reported widening of its standalone net loss to Rs 24.78 billion for the quarter ended 31 March 2017.

The company had posted standalone net loss of Rs 17.87 billion in the corresponding quarter of financial year 2015-16. The revenue is up Rs 109.99 billion against Rs 106.81 billion the previous fiscal.

Reflecting GMR's turnaround efforts and improvement of financial health of the group, the gross debt reduced to Rs 198.56 billion from Rs 374.8 billion.

Asian share markets rose to their best levels in more than two years as positive data on US manufacturing and employment and buoyant European factory growth boosted investor optimism. The Nikkei 225 is up 1.60% while Hong Kong's Hang Seng is up 0.44% and China's Shanghai Composite is up 0.09%. European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.46% while France's CAC 40 is up 0.85% and London's FTSE 100 is up 0.26%.

The rupee was trading at Rs 64.42 against the US$ in the afternoon session. Oil prices were trading at US$ 46.91 at the time of writing.

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In news from economic sector, as per a leading financial daily, with an aim to achieve India's overall growth rate to 8%, Niti Aayog Member V K Saraswat has said that manufacturing sector in country needs to grow at almost 12-14% compound annual growth rate (CAGR). He also said that the country intended to achieve a 25% contribution by the manufacturing sector to its GDP by 2022.

Saraswat expects that the GDP to grow to almost US$2.7 trillion to US$3 trillion by 2022, so the manufacturing contribution to the GDP will be almost 25%. Therefore, he said that they are aiming at US$670 billion, almost adding around 100 million jobs in that direction. He also highlighted that the manufacturing sector's contribution to the GDP was 15% in the fiscal year 2015, almost US$270 billion in a GDP of US$1.8 trillion.

Citing the cutting-edge developments in defense sector worldwide, Niti Aayog Member has said that India could not omit the defense and aerospace sectors if it intended to inject a higher level of input from the manufacturing sector to its economy. He noted that the country's current share of GDP expenditure for research in the defense sector was insufficient.

He also said that they are still spending 0.9% of the GDP in research and development (R&D) and if compare to the top five (defense spenders in world), they are way down. Therefore, he said that the country needed to pump in more investments in research and development to compete with global giants in defense.

Moving on to news from automobile sector. TVS Motor Ltd share price finished the day on an encouraging note (up 1.3%) after the company reported posted a sales growth of 16% during the month of May 2017, with total sales increasing from 243,783 units recorded in the month of May 2016 to 282,007 units in May 2017.

Total two-wheeler sales increased by 15.6% from 238,320 units recorded in May 2016 to 275,426 units in May 2017. Domestic two-wheeler sales grew by 16.3% increasing from 206,886 units in May 2016 to 240,527 units in May 2017.

Meanwhile, as per an article in The Economic Times, Passenger vehicle sales stayed in the fast lane well into the mid-year, with expectations of good monsoon rains and a favorable macroeconomic environment boosting consumer sentiment.

Industry experts, though, expect a temporary blip in sales due to uncertainties about the impact of GST on vehicle prices where the expectation is that large vehicles will become cheaper, while the price of small cars will go up marginally. But they expect the momentum to return to the market after that.

Automobile stocks finished the day mostly in green with Ashok Leyland share price, Escorts Ltd share price and Hero Motocorp share price leading the losses.

In news from telecom sector, Bharti Airtel share price surged 1.7% in today's trade after the company received approval from the Securities and Exchange Board of India (Sebi) and the country's top exchanges - Bombay Stock Exchange and National Stock Exchange-to merge Telenor (India) Communications Pvt. Ltd with itself.

Telenor India and Airtel have filed the joint company application on June 01, 2017, before the New Delhi Bench of the National Company Law Tribunal for approval of the proposed scheme of merger.

Earlier in February 23, 2017, Airtel had entered into a definitive agreement with Telenor South Asia Investments (Telenor). As part of the scheme, Airtel will acquire Telenor India's running operations in seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam.

The proposed acquisition will include transfer of all of Telenor India's assets and customers, further augmenting Airtel's overall customer base and network. It will also enable Airtel to further bolster its strong spectrum foot-print in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band.

In another development, as part of expansion outside India, HDFC has acquired a 15% stake in Tanzania's First Housing Finance for US$1.5 million. The acquisition has been executed through HDFC Investments in which 32.7 million equity shares, equivalent to 15% share capital of First Housing, have been bought at a cash consideration of US$1.5 million.

HDFC share price finished the trading day up by 1% on the BSE.

And here's a note from Profit Hunter:

The Nifty 50 Index ended another week at an all-time high.

The index opened the weekly session lower but recovered immediately and continued trading higher throughout the week to hit a new life high on almost a daily basis. On Friday, the index opened 41 points gap up and traded thinly to end the weekly session with 0.61% gains.

Since the December 2016 low, the Nifty has been trading in a smooth uptrend finding support from the 20-day exponential moving average (EMA) on every correction.

With every successive higher highs in the index, the RSI indicator has been making lower highs, thus forming a negative divergence. But on ever minor correction, the indicator is finding support from the 50 level.

As long as the index stays above the 20 EMA and the RSI above 50, bulls are in control. But any major drop below these levels and the bulls will have to take a back seat.

Nifty Index at New Life High
Nifty Index at New Life High 

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