Mumbai: The benchmark index edged higher on Tuesday as state-run oil companies such as ONGC extended a recent rally, although broader sentiment was still marked by lingering disappointment the prior day’s rupee measures were not bold enough.
Sensex at closing
Reliance Industries gained 1%, also helping indexes recover from two previous days of falls, as traders cited signs the energy conglomerate had stepped in to purchase shares as part of its ongoing buyback.
Indian markets made some gains on Tuesday led by shares of oil firms. Mint’s Krishna Merchant takes us through the day’s action.
Traders say stock markets may remain volatile ahead of the expiry of derivatives on Thursday, and given the rupee currency is hovering near record lows in a reflection of the global unease ahead of a key European Union summit.
“One has to keep eye on rollover and rupee for further cues of the market” said Prakash Diwan, Head of Institutional Clients Group at Asit C.Mehta Investment.
“We expect rupee to test 60 level and then maybe some action and flows would happen” he said
India’s main 30-share BSE index gained 0.14% to 16,906.58 points, after falling 0.9% over the previous two sessions.
The broader 50-share NSE index added 0.12% to 5,120.80 points.
The Reserve Bank of India announced measures intended to prop up the rupee, which on Friday hit a record low of 57.32 to the dollar.
Those measures included raising the limit of foreign investment in government bonds by $5 billion to $20 billion.
However, the announcement was greeted with disappointment, given market hopes for measures to bring in long-term investments that could help narrow the country’s large fiscal and current account deficits as well as boost faltering growth.
Some encouraging developments have helped ease some of the worries. Coca-Cola said on Tuesday it plans to invest $5 billion from 2012 to 2020, which comes after IKEA said on Friday it would invest 1.5 billion euros to enter India.
“There are possibilities of some encouraging talk as well on FDI and Diesel price hike” Diwan said
Gains on Tuesday were led by state-run oil companies, which have rallied this month as slumping crude prices are expected to ease the burden of selling fuels at subsidised prices.
ICICI Securities said this so-called “under-recovery” cost for oil companies has declined to Rs 1,520 crore, below the Rs 2000 crore expected at the start of the fiscal year started in April, and could decline to Rs 1,324 crore if prices for fuels such as diesel are raised.
Oil & Natural Gas Corporation gained 1.72%, bringing its gains for the month to 9.5%, while Gas Authority of India added 2.4%.
Among other gainers, India’s biggest power equipment maker Bharat Heavy Electricals Ltd rose 0.8% after saying it got a Rs 950 crore contract for a hydro-electric project in Bhutan.
Manappuram Finance gained 11.21% after the gold loan company said late on Monday private equity firm Baring India raised its stake by 0.95% to 5.94%.
Midcap construction company NCC gained 0.6% after Citigroup upgraded the stock to “buy” from “sell”, saying the recent share price correction reflected “most” of the risks facing the company.
However, IVRCL fell 1.44% after Citigroup downgraded the stock to “sell” from “buy”, citing lower margins, increased interest costs and funding requirements.