Mumbai: India’s benchmark index rose on Friday to close above 20,000 for the first time in two years, led by gains in state-owned oil and gas companies such as Oil and Natural Gas Corp (ONGC), which surged for a second consecutive session after the government’s diesel price hike was seen reducing their subsidy burden.
The government, which fixes the retail price of diesel, told retailers on Thursday to raise the price of the subsidized fuel in small amounts every month, a move aimed at propping up public finances that should also improve revenues in the sector.
Traders are now expecting more talk of fiscal consolidation in the coming days, even as December quarter earnings reports pick up pace, ahead of the Reserve Bank of India’s (RBI) policy review meeting on 29 January.
“Q3 earnings are important in the near term, but for the medium term monetary policy on 29 January would be the main trigger, followed by budget next,” said Phani Sekhar, fund manager at Angel Broking.
The benchmark BSE index rose 0.38%, or 75.01 points, to end at 20,039.04, closing above the psychologically important level of 20,000 for the first time since 6 January, 2011.
The index added 1.9% in the week.
The broader NSE index rose 0.42%, or 25.20 points, to end at 6,064.40, adding 1.9% in the week.
Besides Reliance Industries Ltd December quarter earnings later in the day, traders would watch earnings reports of many large cap stocks next week, including Hindustan Unilever on Tuesday, and those of Larsen & Toubro and Maruti Suzuki India later in the week.
Shares in state-run oil firms surged for a second day on Friday, with producer Oil and Natural Gas Corp Ltd ending 7.4% higher while Oil India Ltd rose 8.7%.
Among refiners, Hindustan Petroleum Corp Ltd gained 5.4% and Indian Oil Corp rose 10.6%, while Bharat Petroleum Corp Ltd ended 9.8% higher.
However, Nomura said the rally in India’s state-run oil companies on Friday was excessive and that the government’s move to incrementally reduce diesel prices would not lead to any improvement in the bottom line of these companies.
Maruti Suzuki gained 3.6% on hopes the diesel price move would reduce chances of the government imposing duties on diesel vehicles, a scenario some investors had fretted over.
ITC Ltd, India’s biggest cigarette maker, rose 0.8% after it beat estimates with a 21% rise in quarterly profit as cigarette volumes improved after four quarters of stagnant growth, aided by the launch of low-cost products during the quarter.
Shares in India’s National Thermal Power Corp rose 4.7% ahead of its December quarter earnings on Monday.
However, among stocks that fell, India’s No.3 software services provider Wipro Ltd ended 7.7% lower, after a less-than-perfect score on its quarterly earnings report card threw a measure of doubt over the sector’s near-term outlook, with new projects and contracts still elusive.
Among other IT stocks, Tata Consultancy Services (TCS) fell 0.8%, while Infosys ended 0.4% lower.
Shares in Hero MotoCorp, India’s largest motorcycle maker, fell 3% after it missed estimates for the fourth straight quarter as net profit fell 20.4% on rising costs and falling sales that battered margins.
Morgan Stanley said Hero MotoCorp’s shares could fall relative to India’s benchmark index over the next 60 days on the back of “disappointing” Q3 earnings.
India’s No.3 lender, HDFC Bank, fell 0.6%, after its December quarter profits came in line with forecasts with a 30% rise in quarterly profit on Friday, led by higher loan growth, better fee income and stable asset quality.Reuters