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Market expects bull run to continue

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BS Reporter Mumbai
Last Updated : Jan 29 2013 | 2:16 AM IST

Sensex zooms 551 points, the biggest one-day percentage gain since July 23.

The outlook of leading market players turned distinctly positive today as tumbling oil prices calmed inflation expectations and raised hopes for steady interest rates.

After the Bombay Stock Exchange Sensitive Index rallied 3.8 per cent today, their biggest single-day rise in six weeks, most market players said things look good for the short-term. However, the long-term outlook continues to be hazy.

Vallabh Bhanshali, ENAM group chairman, said the falling crude oil prices have definitely reduced the pressure on inflation and has improved the short-term outlook for the market.

But the long-term outlook continues to remain uncertain as no one knows how crude oil prices will behave.

Nirmal Jain, India Infoline chairman, however, has no such worries. “The market outlook looks bright as the worst seems to be over. I see the Sensex at 18000 for two reasons: First, the change in RBI as Dr Reddy was overly cautious. Second, the fall in the crude oil prices will help reduce the pressure on inflation”

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Sandeep Neema, fund manager at JM Financial Mutual Fund, said the steep fall in crude prices is the biggest positive as it sets aside fears of inflation and further interest rate hikes. “I expect interest-rate sensitive sectors to benefit in the near term, which was illustrated by the rally today,” he said.
 

POSITIVE TREND
Sensex Gainers
Share price in Rs 2-Sep-08% chg*
SBI1521.357.44
ICICI Bank713.307.34
DLF529.857.14
ONGC1101.556.97
Jaiprakash Asso173.656.83
Reliance Infra1041.705.99
Maruti Suzuki664.454.84
HDFC2445.154.66
Sensex Losers
Ranbaxy Labs490.35-1.89
Tata Motors429.85-1.82
* Over previous close

Oil slid towards $100 a barrel after early reports showed Hurricane Gustav had spared major US Gulf oil facilities, sharply down from peaks of above $147 in mid-July.

A fall in oil prices is good for India, which imports about 70 per cent of its oil. High energy prices have been a key factor behind inflation that was running at 12.4 percent in mid-August.

The 30-share benchmark BSE index rose 551.35 points, to 15,049.86, its highest close since August 13. It was the biggest one-day percentage gain since July 23.

The market is closed on Wednesday for Ganesh Chaturthi. Trading resumes on Thursday.

ICICI Bank and Reliance Industries, which have a combined weight of more than 22 per cent in the main index, led the gains adding 7.3 and 3.4 per cent, respectively.

State Bank of India jumped 7.4 per cent to Rs 1,521.and the banking sector index firmed 6.06 per cent on hopes falling oil prices would ease the pressure on the central bank to tighten policy.

Twenty-eight of the BSE index’s components rose. In the broader market, 1,684 gainers were ahead of 988 losers on volume of 294 million shares. Still, the BSE index is down more than a quarter this year.

Tata Motors dropped 1.8 per cent to Rs 429.85 after it priced two rights issues, totalling Rs 4150 crore to help fund its $2.3 billion acquisition of Jaguar and Land Rover brands.

Traders said investors were concerned as the rights issue would result in equity dilution immediately with no big contribution seen from the marquee brands to the company’s profitability.

Vaishali Jajoo, analyst at Angel Broking, estimated 33.4 per cent equity dilution from the rights issues.

Ranbaxy Laboratories closed down 1.9 per cent at Rs 490.35, ahead of the close on Thursday of an open offer, launched by Japanese drug maker Daiichi Sankyo to buy a further 20 per cent in the company.

Traders said the Ranbaxy shares, which dropped as much as 10.4 per cent in opening deals, were likely to see a sharp fall after the close of the open offer.

The broader 50-share NSE index rose 3.57 percent to 4,504.

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First Published: Sep 03 2008 | 12:00 AM IST

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