Hesitant as peak in view

STOCK REPORT

Key indices signed off at new closing highs on Tuesday, largely unaffected by the petrol and diesel price hike announced on Tuesday by the government. Oil shares of ONGC, Indian Oil, and BPCL ended in the red, while HPCL retained early gains.

The Bombay Stock Exchange's Sensex ended at 7946.78, up 21.54 points. The National Stock Exchange's Nifty rose 5.70 points to close at 2428.65.

Profit sales in key index shares led the indices downward from their opening highs, dealers said. Moreover, there was some nervousness as the Sensex was nearing the crucial 8000-mark, they said.

Sensex had touched a high of 7976.40 and a low of 7914.41 in intra-day trades. Nifty touched a high and low of 2436.25 and 2417.00, respectively.

Stock specific trading and cautious approach led to a subdued session on Tuesday, said Manish Sonthalia, vice-president of equity strategies at Motilal Oswal Securities.

Though Sonthalia believes the Sensex would definitely breach the 8000-mark, he expressed doubts on it topping the 8050-8100 level.

Contrary to this, Praveen Mallik, vice-president at Rolta Shares, believes that indices are headed for a further 200-300 point rally once it breaches the 8000 level.

Commenting on impact of oil price hike on the market, Sonthalia disagreed with Mallik that the hike has already been factored into current market prices.

"I feel market will take time to let the fact sink in and will give some reaction thereon," Sonthalia said.

Mallik believes the hike is unlikely to have any major impact on the inflation rate, which is already lower than expectations. India's headline inflation rate based on the wholesale price index fell to 3.08 per cent in the week to August 20 from 3.13 per cent a week earlier.

Top performers in the Nifty included bank shares Oriental Bank of Commerce, State Bank of India, and Punjab National Bank, up 2 per cent each.

Losers in the Nifty included Bajaj Auto, Gujarat Ambuja Cement, and Dabur India, down over 1 per cent each.

Among second rung indices, the CNX Micap index ended flat at 3726.35. Intra-day it had touched a record high of 3749.10.

From midnight the retail prices of petrol and diesel would increase by Rs 3 and Rs 2 a litre, respectively.

"The hikes may not provide any trigger at the moment as it was anticipated," said Kamlesh Kotak, who is Asian Market Securities' research head.

He noted the market had expected steeper hikes. That would have benefited oil marketing companies, which currently sell fuel below cost.

On the other hand, if fuel prices are raised sharply, inflation will begin to climb, and eventually push interest rates up, which could hamper corporate performance.