Sensex, Nifty post biggest gains in three weeks amid crude oil price slump

Indian stocks gained as investors cheered the continued decline in the price of crude oil, the nation’s biggest import, while brushing aside uncertainty around the outcome of elections.

Most global markets also advanced as investors looked more optimistically on the outlook for trade and interest rates in the wake of another miserable week in markets.

The benchmark S&P BSE Sensex climbed 1.1 per cent to 35,354, its biggest percentage advance in more than three weeks. Nifty50 ended at 10,628.6, gaining 102 points, or 0.97 per cent — the most since November 2.

The market rose in the second half of the session, rallying from a drop of 0.2 per cent. Markets were shut on Friday, when oil prices had dropped 7 per cent to its lowest level in more than a year.

Stocks tied to crude oil prices such as airlines, paints, chemicals, refiners and lubricants were in focus as Brent plunged 6.1 per cent on Friday to $58.8 per barrel, capping its worst week in almost three years. Brent crude traded at $60 a barrel at time of India market close, down over 30 per cent from $84 a barrel on October 3.

“The oil price crash will help in reducing pressures on import bills, the rupee exchange rate, foreign exchange reserves and costs of raw materials for Indian corporates. Consequently, even inflation will ease,” said Chokkalingam G, managing director at Equinomics Research & Advisory, adding, “If oil prices stay at current levels or even fall further, it would help equity markets partly mitigate possible risks emanating from the general elections.”

Both foreign and domestic institutional investors remained net-buyers on Monday, with the former buying shares worth Rs 627 million and the latter investing

Rs 3.5 billion. Fourteen of the 19 sector sub-indexes compiled by the BSE gained, led by the S&P BSE Fast Moving Consumer Goods Index, which surged 2.2 per cent. A measure of metal stocks fell the most.

HDFC Bank and Hindustan Unilever (HUL) gave the biggest boost to the benchmark index, while Sun Pharmaceutical Industries was the biggest drag.

 
Hero MotoCorp and HUL were the top performers on the benchmark index gaining 5 per cent and 4.2 per cent, respectively.
 
Shares of Bharti Airtel climbed as much as 3.4 per cent after Bharti’s Africa unit has appointed eight banks - JPMorgan, Citigroup, Bank of America Merrill Lynch, Absa Group, Barclays Bank PLC, BNP Paribas, Goldman Sachs International, and Standard Bank Group - to manage its initial share sale.
 
Experts said investors will be closely watching the outcome of elections in five states in November and December to gauge the nation’s mood ahead of the national ballot next year. The counting of votes in all the states will be held on December 11.
 
“Market regained strength amid volatility supported by positive global cues and improvement in domestic macros on account of sharp fall in crude and firming rupee,” said Vinod Nair, head of research, Geojit Financial Services, adding, “However, investors remain cautious due to uncertainty over US-China trade war, domestic state elections, and dimming global outlook on account of sharp fall in oil prices.”