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At the closing bell, the BSE Sensex closed marginally higher by 10 points, while the NSE Nifty finished higher by 7 points. However, S&P BSE Midcap and S&P BSE Small Cap inched upwards and ended the day higher by 0.6% and 0.9% respectively.
Major Asian markets finished on a mixed note as of the most recent closing prices with stock markets in Japan and Singapore ending the day higher by 0.9% and 0.5% respectively. Whereas, stock markets in China ended the day lower by 0.3%. Oil prices were trading at US$ 51.96 a barrel at the time of writing. The rupee was trading at 66.73 against the US$.
As per an article in Livemint, the Board of National Mineral Development Corporation (NMDC) and Manganese Ore India Ltd (MOIL) have approved a buyback of shares. A little over 20% of the paid up capital would be bought back in each of these companies.
NMDC and MOIL will buy back the shares at a premium of 5.26% and 2.01% respectively from their previous close.
Further, the government currently holds 80% stake in each of these companies. The buyback from both the companies will help the government to raise Rs 84 billion. Further, this will also help the government to move closer towards its disinvestment target. The government has set a disinvestment target of Rs 565 billion for 2016-17.
Moreover, the buyback will help to keep the fiscal deficit in check. As the macro factors like crude prices have started moving against our favour, the government will have to find sources of revenues to keep the fiscal deficit at the desired levels.
Talking about fiscal deficit, Radhika Pandit, Managing Editor of ValuePro, has written an excellent article stating how the rising crude prices could become the ruling government's worst enemy. You cannot miss this interesting piece. Click here to access it.
In another news update, Indian Meteorological Department (IMD) stated that the southwest monsoon has hit the southern state of Kerala and declared the onset of the rainy season. IMD expects it to rapidly advance over the rest of the country.
The agency in April had stated that the monsoon rainfall will be 106% of the long period average and there is a 94% probability that monsoon will be normal to excess. Reportedly, the monsoon is considered normal when the rainfall is 96 to 104% of the Long Period Average (LPA) and is considered above normal when it is 105% to 110% of LPA.
A normal monsoon will lead to higher disposable income in the hands of farmers, which in turn will boost rural consumption. To add to this, a normal monsoon will also help to keep the inflation at low levels. The possibility of a good monsoon would also increase the chances of the country's central bank retaining its easy money policy. However, there have been many instances in the past wherein the forecasts have gone wrong. Provided, they are accurate it will help revive rural sentiments.
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