Sensex gains 75 points as RIL, ONGC move up; bank stocks decline on continuing concerns of a rate hike
Trading started on a high note on Thursday, triggered by Asian stocks which rebounded after a sharp decline yesterday in a knee-jerk reaction to the increase in the cash reserve ratio for Chinese banks. But after a robust opening, the market was sold off until it firmed up after the European market opened strong. The day ended with a gain of 75 points in the Sensex which closed at 17,585. The index touched a high of 17,628 and a low of 17,525 during the session. The NSE Nifty ended at a provisional 5,259 points, up 0.48% or 25 points. The premarket futures in US are trading higher, as are European markets. Higher prices seem to be the path of least resistance.
Asian stocks were higher following a higher close in US stocks on Wednesday. The Dow Jones Industrial Average hit a fresh 15-month closing high, gaining 53 points. The Standard & Poor's 500 Index gained 9.46 points and the Nasdaq Composite Index was up 25 points, or 1.12%, to 2,307.90.
Among Indian stocks, Punj Lloyd has secured a Rs574 crore offshore EPC contract from PTT Public Company Ltd, a Thailand state-owned oil and gas major, for platform compression facilities in the Gulf of Thailand. The stock was up nearly 2% at Rs216.50.
Infosys was up for the fourth consecutive day while TCS was down. Wipro was up 3.61%.
The market was propped up by a rise in two heavyweights—RIL and ONGC. RIL rose 2.26% after it announced raising $763 million through a block sale of 3.3 crore shares on Monday.
BHEL (up 1.89%) has received a Rs200-crore order from PowerGrid for supplying insulators needed in transmission lines.
Bank stocks were down on continuing concerns of a rate hike.
The surprise of the day was that oil marketing companies (OMCs) did not get sold off and ONGC was actually up 2.94%, despite the petroleum minister Murli Deora stating that the FM has not agreed to the demand of Rs31,800 crore of cash &/or oil bonds to compensate for fuel subsidy. In fact, the finance ministry has clearly re-iterated today that there would be no oil bonds issuance this year.
This was anticipated because government finances are stretched for FY10. In fact, a few days back, the finance secretary had said that the government would be willing to pay cash of only Rs12,000 crore-Rs15,000 crore, leaving a gap of Rs15,000 crore over and above the Rs17000 crore loss suffered by oil firms in upstream operations . After Murli Deora’s comment today, the OMCs should have sold off. But, of course, we are in a bull market.