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Markets extend gains to 2%; traders still cautious

Markets extend gains to 2%; traders still cautious
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First Published: Fri, Jun 24 2011. 12 37 PM IST
Updated: Fri, Jun 24 2011. 12 37 PM IST
Mumbai: Markets extended gains to 2% on Friday, raising hopes for a first weekly gain in three , as global appetite for risk got a boost after Greece struck a deal for an austerity plan to avoid a debt default. Financials led the gains.
At 11:59am, the 30-share BSE index was up 1.93% at 18,068.75 points, with 29 components advancing. The 50-share NSE index was up 1.91 percent at 5,421.55 points.
Investors, however, were cautious ahead of a government decision expected later in the day on raising state-controlled prices of fuel such as diesel and cooking gas.
“This is short-covering due to certain positive news flow including Greece, a possible correction in oil prices and also higher Asian markets,” Ambareesh Baliga, chief operating officer of Way2Wealth Securities said.
Greece won the consent of international lenders on Thursday for a five-year austerity plan intended to avoid looming bankruptcy and its prime minister pledged to push radical economic reforms through parliament.
JPMorgan and Goldman Sachs slashed forecasts for crude prices in the third quarter after the International Energy Agency announced the release of 60 million barrels of oil next month to shore up the economic recovery.
Baliga said investors were still wary as an increase in domestic fuel prices could dampen sentiment.
The oil ministry is seeking an increase in diesel and cooking fuel prices on Friday as well as a cut in taxes on fuel products, a ministry source said on Thursday.
A hike in fuel prices could add to woes on high inflation and dent profit margins of companies already reeling from higher input and interest costs.
State-run oil marketing companies Indian Oil , Bharat Petroleum and Hindustan Petroleum that would benefit from any increase in fuel prices were up between 1.2 and 3.3%.
Reliance Industries , which has the highest weighting on the main index fell as much as 1.7%.
The energy major has been under pressure and has fallen nearly 17.8% year-to-date, as concerns over its gas production have for months dampened growth outlook.
In the broader market, 1,043 gainers were ahead of 271 losers on a volume of 192.2 million shares.
If the BSE index, or Sensex, closes up more than 1% on Friday, it would help the benchmark post its first weekly gain since early June, but the outlook remains uncertain.
The index is down 13.6% year-to-date, and is the worst performer among major Asian markets. By comparison, MSCI’s measure of Asian shares other than Japan is down 3.08% so far in 2011.
The Sensex is headed for its second annual decline in a decade as persistently high inflation, rising interest rates and slowing growth keep investors at bay, a Reuters poll showed.
Sugar producers rose for the second day after the government decided to allow another 500,000 tonnes of sugar exports. Shree Renuka Sugars Ltd was up 3.2% at Rs 59.85, while Bajaj Hindusthan Ltd and Dhampur Sugar Mills gained 2.2-2.4%.
SpiceJet rose 9% after the Mint newspaper reported that the budget carrier sought the central bank’s nod to raise $270 million from Canada’s export finance agency for financing its fleet expansion.
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First Published: Fri, Jun 24 2011. 12 37 PM IST
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