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Markets up 1%; ONGC, Reliance gain

Markets up 1%; ONGC, Reliance gain
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First Published: Mon, Jun 28 2010. 02 06 PM IST
Updated: Mon, Jun 28 2010. 02 07 PM IST
Mumbai: Indian shares extended gains to more than 1% on Monday afternoon, led by Reliance Industries and Oil and Natural Gas Corp.
By 2:13pm, the 30-share BSE index was up 0.97% at 17,743.90, with 24 components gaining, after hitting 17,751.18. The 50-share NSE Index was up 1% at 5,322 points.
Markets climbed 0.5% in the morning with ONGC and No. 2 mobile operator Reliance Communications among the gainers.
ONGC, the country’s biggest oil producer, extended gains for a second day after the government freed up state-subsidised petrol prices and raised the prices of other fuels. The stock rose 5.3% to its highest level two-and-a-half years.
Reliance Communications rallied as much as 6.4% to its best in eight months after it agreed to merge its telecoms towers business with that of GTL Infrastructure.
By 11:03am, the 30-share BSE index was trading up 0.53% at 17,666.80 points, with 21 of its components gaining. The 50-share NSE index was up 0.6% at 5,299.
“The newsflow is helping the market move up today,” said Deven Choksey, managing director and CEO of KR Choksey Shares. “Investors will await June quarter earnings for more cues. Going by the advance tax figures, the earnings are likely to be robust.”
Foreign funds have invested around $2 billion in Indian equities so far in June, reflecting a vote of confidence in the fast-growing economy that is expected to expand 8.5% in 2010/11.
The inflow has reversed the outflow in May when euro zone worries had dented risk-taking capacity.
The BSE index should rise to 19,000 points by the end of 2010, the median estimate in a Reuters poll of 20 market participants showed, while 17 forecast it rising to 21,000 by the end of June 2011.
ONGC was trading up 3.2% at Rs1,304.90, after hitting 1,330.80, its highest level since January 2008. The increase in fuel prices would help lower the company’s subsidy burden and boost earnings.
New Delhi freed up petrol prices and raised prices of other state-subsidised fuels like diesel, kerosene and cooking gas on Friday in a move that could help reduce the fiscal deficit from the projected 5.5% of 2010/11 GDP.
State-run oil marketing companies Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp that would also benefit from the increase in prices were up between 3.6% and 7.4%.
Reliance Communications was trading up 3.6% at Rs199.35, after touching Rs204.75, its highest since 28 October, 2009. with analysts saying the towers deal would benefit shareholders.
“We view this deal as a positive development as it will help RCOM reduce its net debt and leverage,” Deutsche Bank analysts Srinivas Rao and Amyn Pirani said in a note.
GTL Infrastructure shares were up nearly 5%.
Macquarie Capital Securities raised its rating on Reliance Communications to “outperform” from “underperform”,
Energy giant Reliance Industries which has the highest weight on the Sensex, climbed 1.5% to Rs1,079.35.
The Economic Times reported the energy major and Mexican state-run oil giant Pemex may join hands to develop a greenfield refinery in Mexico.
In the broader market, gainers were more than double the number of losers on volume of 124 million shares.
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Metal producers Sterlite Industries Hindalco and Tata Steel were up between 0.5% and 1.3% as base metal prices rose in London and Shanghai.
Lenders edged lower on fears the fuel price rise will accelerate inflation and increase pressure on the central bank to raise interest rates. State Bank of India and HDFC Bank dropped 0.2% and 1.1% respectively.
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First Published: Mon, Jun 28 2010. 02 06 PM IST
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