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Markets rise 1% on firm Asia; ONGC up

Markets rise 1% on firm Asia; ONGC up
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First Published: Fri, Sep 16 2011. 11 14 AM IST
Updated: Fri, Sep 16 2011. 11 14 AM IST
Mumbai: Markets rose more than 1% on Friday, bolstered by firmer Asian markets and expectations the central bank would tone down its hawkish stance in the wake of slowing growth.
Traders said the market has factored in a quarter-point increase in rates at the Reserve Bank of India’s (RBI) policy at noon, and would be watching for comments on the outlook.
A rate rise would be the 12th in 18 months and most economists expect the central bank to halt thereafter.
Leading lender State Bank of India and rival ICICI Bank were up 0.5% and 1% respectively. The broader BSE bank index was up 0.65%.
At 10:49am, the 30-share BSE index was up 1% at 17,043.43 points, with 24 of its components rising.
“People have factored in a 25 basis point hike,” said Kishor Ostwal, chairman at CNI Research. “Simultaneously, they believe the RBI will not continue with their hawkish stance. If that happens then market will remain in positive territory.”
State-run oil refiners such Indian Oil Corp , and Bharat Petroleum Corp were up 1-2% after they raised petrol prices by nearly 5%.
“To my mind this is a fundamentally positive signal which the government is giving to the economy,” said Deven Choksey managing director at brokerage K.R. Choksey. “This in turn means that going forward we will probably have larger amount of deficit under control.”
He said an increase in fuel prices would help reduce the subsidy bill and boost earnings of refiners.
State-run explorer Oil & Natural Gas Corp rose 6% after it deferred a follow-on share sale, valued at around $2.5 billion, due to poor market conditions.
Choksey said investors who had sold in anticipation of getting firm allotment at the offering were covering their positions.
Maruti Suzuki was trading flat after falling more than 1%. The leading car maker said it would cease production on Friday due to unrest at its Suzuki-owned engine supplier, as an 18-day long standoff with striking workers brings its factories to a halt. .
The broader 50-share NSE index was up 0.85% at 5,118.90 points.
There were 1.56 gainers for every loser in the broader market on total volume of 175.77 million shares.
The market was also underpinned by improved global sentiment after coordinated action by major central banks around the world ensured European banks have access to dollar funding.
The MSCI’s measure of Asian markets other than Japan was up 2.6% and Japan’s Nikkei gained 2.1%.
STOCKS
Tata Motors Ltd rose more than 5% after it said its global vehicle sales in August rose 3% from a year ago. .
Tata Steel rose 1.9% after the world’s No.7 producer said it won an order worth 80 million euros ($110 million) for supplying railway lines for a new high speed track between the French cities of Bordeax and Tours. .
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First Published: Fri, Sep 16 2011. 11 14 AM IST
More Topics: Markets update | Asia | Oil | ONGC | US stocks |