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Markets Cheer Petrol Price Hike; Sensex Up 274 Pts
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The recovery in rupee from its fresh record lows also helped the sentiment in the stock market.
While consumers and several political parties criticised the government for the increase hike in petrol prices, the stock market hailed the move sending energy stocks like ONGC (5.74 per cent) and Reliance (1.35 per cent) higher as investors believe this will give a push to further economic reforms.
However, oil marketing companies like IOC, BPCL and HPCL could not sustain their initial gains as pressure mounted on the government for a roll-back of petrol prices. Earlier in the day, investors were hopeful that the government would show conviction to hike prices of regulated diesel and cooking gas.
Investors were richer by nearly Rs 68,000 crore today as funds pumped were into blue-chips stocks such Bharti Airtel, HDFC, Jindal Steel and ICICI Bank.
Out of the 30 Sensex stocks, 24 scrips ended higher.
"An EGoM is scheduled tomorrow and will be keenly watched if the govt raises prices of the politically sensitive regulated fuels...we think this move (hiking petrol prices) is positive from a sentiment point of view, and suggests that the government could implement measures to stem the de-rating of the India story," said Rohini Malkani, Economist, Citi India.
After opening at 16,033.90, the trading sentiment improved further as Sensex hit an intra-day high of 16,252.37, before finally closing at 16,222.30 - a rise of 274.20 points or 1.72 per cent over its previous closing.
Brokers said apart from firm European cues, the rupee going back to 55-level after hitting an fresh low of 56.38 a dollar boosted mood today.
Similarly, the NSE 50-issue Nifty also spurted by 85.75 points or 1.77 per cent to 4,921.40.
Buying was seen across the board as all 13 sectoral indices closing higher with up to 2.33 per cent gains.
However, any further measure on fuel price increases will stroke inflation but will likely make the RBI review its options on reducing interest rates further, said Dipen Shah, Head of Fundamental Research, Kotak Securities.
Globally, Asian markets today ended narrowly mixed after Chinese manufacturing data showed slowdown in activity. Key indices from China, Hong Kong, Singapore and Taiwan ended with losses while those from Japan and South Korea ended higher.
In Europe, France's CAC was trading up by 0.45 per cent, Germany's DAX was up 0.34 per cent and UK's FTSE was higher by 0.80 per cent as European Union (EU) leaders reportedly discussed steps to prevent the possible fallout of a Greek exit from the currency bloc at an informal summit yesterday.
Back home, major gainers from the Sensex pack were ONGC (5.74 per cent), Bharti Airtel (5.62 per cent), HDFC (4.38 per cent), Jindal Steel (3.46 per cent), HDFC Bank (3.06 per cent), ICICI Bank (3.04 per cent), Hindalco (2.93 per cent), Tata Motors (2.04 per cent), Wipro (2.03 per cent), L&T (1.65 per cent), RIL (1.35 per cent), Infosys (1.21 per cent), M&M (1.12 per cent), Bajaj Auto (1.05 per cent) and Sterlite (1.06 per cent).
However, losers were led by Maruti Suzuki (0.53 per cent), TCS (0.34 per cent) and Sun Pharma (0.25 per cent).
"Hike in petrol prices is expected to adversely affect the sales of the auto sector," said Shanu Goel, Sr. Research Analyst, Bonanza Portfolio.
The market breadth turned positive as 1,544 stocks finished with gains while 1,140 stocks ended with losses.
The total turnover firmed up to Rs 1,945.50 crore from Rs 1,821.04 crore previously.
However, FIIs sold shares worth Rs 361.07 crore yesterday as per provisional data with stock exchanges.