Wrap up| Indian stocks gain ground on easing crude prices

Wrap up| Indian stocks gain ground on easing crude prices

New Delhi: Easing crude oil prices helped Indian stocks shrug-off higher than expected February inflation numbers. After opening on a positive note, Indian markets gained momentum by mid-day as research houses upgraded stocks such as Larsen & Toubro, Reliance Capital and Petronet LNG. Brent crude oil prices eased on expectations that pausing of economic activity in Japan will lead to lower demand.

Sensex: 18,439, +1.5%

Nity: 5,531, +1.6%

Nikkei: 9,620, –6.2%

Topix: 846, –7.5%

FTSE 100: 5,833 +0.1%

Rising fuel and manufacturing prices drove inflation higher in February. The numbers came in at 8.31% compared to 8.24% rise in January. All sectoral indices closed in gains with Oil & Gas stocks leading the gains.

BSE Oil & Gas: 9,935, +2.2%

BSE Metal: 15,672, +1.9%

BSE Bankex: 12,378, +1.5%

BSE IT: 6,241, +1.5%

Shares of Reliance Capital surged after the company said it was selling 26% stake in its subsidiary Reliance Life Insurance to Japan’s Nippon Life Insurance for $680 million. The transaction values the life insurance subsidiary at $2.6 billion. The stock which was on a losing streak since October 2010, was upgraded to buy from underperform by Bank of America Merrill Lynch. Larsen & Toubro is the other stock that was upgraded on Monday. BNP Paribas upgraded the engineering and construction major to buy from hold citing that the correction in stock price has been overdone.

Reliance Capital: 562 +9.9%

Larsen & Toubro: 1,564 +1.5%

Falling crude prices revived investor interest in the oil & gas marketing companies. Stocks of state owned companies constitute major part of the BSE Oil & Gas index. Most of these companies either directly or indirectly subsidise the petroleum products sold in India. Falling crude prices are expected to lower under-recoveries for these companies.

Gail India: 462 +4.5%

HPCL: 334 +4.3%

BPCL: 570 +4.4%

Reliance Industries: 1,017 +2.6%

Buying was also visible in metal stocks with steel manufacturers leading the gains. The stocks gained on expectations that metal exports from Japan will fall considerably once re-construction gathers pace. This is expected to revive prices of steel in international markets. Investors also bought SAIL after the company said it is conducting a joint feasibility study with Japan’s Kobe Steel for a steel plant and a 1,000 megawatt gas-based power plant in north India.

Tata Steel: 601 +3.3%

JSW Steel: 927 +2.8%

SAIL: 159 +2.7%

Jindal Steel: 664 +2.1%

Overall it was a good day for the Indian stock markets. 50.7% of the stocks traded on the BSE closed the day with gains.