 "Reliance Industries, RIL")
The benchmark indices recorded their biggest gain in nearly two months, driven by rallies in Reliance Industries Ltd (RIL) and HDFC Bank, the top two weighted stocks.
The Sensex surged 1,241 points, or 1.8 per cent, closing at 71,942, while the Nifty 50 ended at 21,738, rising 385 points, or 1.8 per cent — the biggest single-day gain for both indices since December 4. RIL and HDFC Bank contributed to over half of these gains. RIL shares rose amid reports that it would benefit from the Red Sea crisis due to higher refining margins. Reports suggested that India’s oil purchases from Russia, a major source for RIL, remained largely unaffected by the Red Sea situation.
“RIL is a big beneficiary of Russian oil. And their margins might improve because of this,” said U R Bhat, co-founder of Alphaniti Fintech. Shares of ONGC also rallied over 8 per cent.
According to market players, investors showed interest in energy stocks, expecting increased budgetary outlay to the sector on February 1.
RIL shares got an additional boost from reports that Walt Disney’s India unit is valued at less than half the initial price in a proposed merger with the company.
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RIL shares rose 6.8 per cent to a record high of Rs 2,896, valuing the company at Rs 19.6 trillion. The stock is trading at a one-year forwarded price-to-earnings (PE) ratio of 24.2 against its 10-year average of 15.2.
“The company’s valuations are a bit stretched, but they are coming with new income streams. We do not know whether these projects will lead to a huge cash flow, but there is a possibility given their track record of project implementation,” said Bhat.
The market players said HDFC Bank’s shares increased on value buying following a 15 per cent decline due to the weak December-quarter results. Both HDFC Bank and RIL have a significant weighting in the Nifty, at 11.2 per cent and 9.6 per cent, respectively.
Amidst measures by the Chinese government to stabilise equity markets, some of Asia’s peers experienced gains.
Investors are now closely monitoring the Federal Reserve's monetary policy decision on Wednesday and India’s Union Budget on Thursday.
The Bank of England will announce its rate decision on Thursday, and a bunch of macro indicators from the developed world will determine the market trajectory.
“FPI flows will give a fresh impetus. It was not very encouraging for the last few days,” said Bhat.
Andrew Holland, chief executive officer, Avendus Capital Public Markets Alternate Strategies, said investors would be watching for any negative surprises in the Budget.
“We are not expecting any big-bang reforms in this Budget. As long as it is more of the same, like a thrust on capital expenditure, the markets would be happy,” said Holland.
The market breadth remained positive, with 2,252 stocks advancing and 1,671 declining. Four-fifths of Sensex stocks gained. Foreign portfolio investors were net buyers of shares worth Rs 110 crore on Monday, while domestic institutional investors bought shares worth Rs 3,221 crore, according to the provisional data from the exchanges.
