The Hindu : Business : Stocks firm amidst oil price fears

Online edition of India's National Newspaper
Monday, Oct 11, 2004

Business

Business

Stocks firm amidst oil price fears

SUSTAINED FOREIGN inflows, fall in inflation and the good response to the initial public offer of National Thermal Power Corporation kept the stock markets alive last week. Bulls were in total command. However, spiralling global oil prices and a decline in the overseas markets were a major concern. Ahead of the corporate earnings reports, investors preferred to adopt a wait and watch attitude.

In Saturday's special trading session, the market opened on a steady note. In lacklustre activity, it witnessed alternate bouts of buying and selling and profit booking at higher levels and the Sensex shed 19 points in low volume.

During the week, the benchmark 30-share sensitive index rose 82.39 points or 1.4 per cent to close at 5,757.93. On the National Stock Exchange, the S&P CNX Nifty gained 42.65 points to settle at 1,817.80.

Foreign institutional investors were net buyers in the equity segment to the tune of nearly Rs 1,370 crores. This consistent inflow of funds shows the positive attitude that FIIs have towards India. The Finance Minister in his New York Investors Meet confirmed that the reform process would continue. This assurance might lead to an increased emphasis on India. Apart from FII support, brisk buying was also initiated on expectations of improved second quarter results.

IT stocks were in the limelight ahead of the results which will be declared from next week onwards. The IT sector continues to be benefited by strong volume growth, stability in pricing, weak currency and further room for earnings upgrades.

Infosys is having its board meeting on October 12 to declare its quarterly results and interim dividend. TCS, which was listed last month, is supposed to declare its results on October 13. Since this is the first quarterly result since listing, there is much interest among investors. This may keep the share volatile.

Sailing was smooth for shipping stocks such as Shipping Corporation and GE Shipping. As per reports, tanker freight rates had risen sharply in the past few months on account of a surge in Chinese demand for oil.

In stock specific activity, Bharti Tele-Ventures and Birla Corporation were in the limelight.

However, oil marketing companies continued to display subdued trends. The weakness could be attributed to the fact that global crude oil prices peaked at $53 a barrel. An already stretched supply chain has been stressed by the lingering loss of U.S. production from the Gulf of Mexico and threats to Nigerian and Norwegian supplies. Analysts however expect oil shares such as ONGC, BPCL, IOC and Reliance Industries may be able to repeat earlier performance despite the continuous rise in crude oil prices.

Steel stocks such as Tata Steel and SAIL firmed up further on expectations of good performance in the second quarter.

Auto stocks weakened following the sustained rise in crude oil prices.

The undertone of the market remained cautious. Market analysts felt that high inflation, high crude oil prices and shortage of rainfall would limit the upside. One could consider aggressive positions after the corporate earnings reports, they advise.

Interest in NTPC may keep the sentiment of power stocks such as PTC, Tata Power and GIPCL strong this week. Continuous increase in prices of metals such as copper and aluminium on London Metals Exchange can prove beneficial for National Aluminium and Hindalco.

The market is in the overbought zone and further rise in crude price may cause profit booking in index scrips. Midcap stocks, particularly in pharma and textile segments, are likely to dominate the market.

Rupee at three-month peak

The Indian currency climbed to a near three-month peak against the U.S. dollar driven up by robust trade and foreign capital investment inflows with sentiment positive for further gains.

In fairly active trade during the week, the rupee ended at 45.8050/8150 a dollar, a sharp ten paise rise from the previous weekend level of 45.90/92 a dollar after trading in a range of 45.8400 and 45.9400.

Despite surging oil prices to $53 a barrel, the rupee gained support from the resumption of heavy trade and foreign portfolio investment inflows into the vibrant economy.

Interest rates harden

Interest rates higher Interest rates ended higher as compared to the previous week. The ten-year government security was traded at 6.60 per cent and the five-year security at 6.30 per cent. The year-on-year inflation was lower at 7.38 per cent for the week ended September 25.

Our Bureau

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section

Riding the Oil Tiger

The burden is on economy

Firefox extension modules

Failed bid to extend textile quota regime

Stocks firm amidst oil price fears

Forcible recovery need not be unduly aggressive