Indian shares surged today as a 6 per cent fall in crude oil prices over the last two days and Greece’s deal with international lenders boosted investor sentiment.
Heavy buying by foreign investors and short-covering took the Bombay Stock Exchange (BSE) Sensex over 18,000 after six trading sessions. The 30-stock index rose 513 points, or 2.89 per cent, to 18,240. The 50-stock National Stock Exchange Nifty rose 151 points, or 2.84 per cent, to 5,471.
“A sharp fall in crude oil prices due to action by the International Energy Agency (IEA) triggered the positive sentiment,” said Gopal Agrawal, head of equities, Mirae Asset Global Investments (India). “Foreign institutional investor (FII) flows were net positive and, of course, there was some short-covering, too,” he said.
At 7:20 pm, Brent crude oil was at $106.56 a barrel, down 2.31 per cent from its previous close of $109. The near-month futures of Nymex crude, which slipped below $100 a barrel a fortnight ago, was at $90.88 a barrel.
The 28-member IEA yesterday announced release of 60 million barrels oil from strategic reserves built by member countries. They would release two million barrels a day, mostly crude oil, over the next 30 days to offset the fall in output in Libya due to the political crisis there. (Click here for graph & tables)
According to provisional BSE data, FIIs net-bought shares worth Rs 890.44 crore, while domestic institutional investors were net sellers to the tune of Rs 486.85 crore.
“The country’s biggest worries are oil (it imports three-fourth of its requirement) and inflation. Since crude oil has shown a decent correction in the past two days, the sentiment has improved,” said Agrawal. Aviation stocks were the major gainers. On BSE, SpiceJet closed 19.85 per cent higher at Rs 32.60, while Jet Airways moved up 13.76 per cent to Rs 469.65. Kingfisher Airlines rose 7.93 per cent to Rs 38.80.
All BSE sectoral indices, except the consumer durables index, closed in the green. The realty index rose 3.76 per cent and was the top gainer. Others rose 3-3.5 per cent. Dharmesh Pancholi, senior manager, advisory (equity), Sharekhan, said, “It is more of a short-covering. Because of IEA’s intervention, the sentiment has improved. The market is still trading at a very attractive valuation on a forward earning basis. The outlook for the next week looks positive as the Nifty may reach 5,550. It has to be seen how the rollovers happen next week.”
Among Sensex gainers, Hero Honda rose 6.07 per cent to Rs 1.866.15, State Bank of India 5.95 per cent to Rs 2.288.15 and Jaiprakash Associates 4.55 per cent to Rs 79.25.
HDFC, L&T and Tata Steel gained 3-4.5 per cent. Reliance Industries and Reliance Infrastructure were the only Sensex stocks to end in the red, with losses of 0.03 per cent and 0.84 per cent, respectively.
Earlier, major Asian markets also rose. China’s Shanghai Composite index rose 2.16 per cent, Hong Kong’s Hang Seng 1.9 per cent, Japan’s Nikkei 0.85 per cent and South Korea’s Kospi 1.7 per cent.
