Nifty hits fresh 2-yr high; BPCL surges 9.6%, IOC 10.5% after OMCs allowed to raise diesel prices
The benchmark BSE Sensex closed above the psychological 20,000-mark for the first time in two years on Friday, driven by sharp gains in oil and energy stocks after the Cabinet on Thursday allowed oil marketing companies to raise diesel prices in a phased manner. The gauge ended the week with gains of 1.9%.
Foreign institutional investors (FIIs) continued to shop for equities, buying shares worth around $215 million on Friday on optimism surrounding government reforms and hopes of interest rate cut by the Reserve Bank of India (RBI). With purchases of $914 million this week, FIIs have net bought shares totalling $2.5 billion in the year-to-date, staying net buyers for 14 straight sessions.
On Friday, the 30-share index closed at a two-year high of 20,039.04, up 75.01 points, or 0.38%, from Thursday's close. The broader 50-share Nifty also closed at a fresh two-year high of 6,064.40, up 25.20 points, or 0.42%. However, broader markets ended weak as traders booked profits on concerns that the recent rally may not sustain.
“The markets have had a significant run-up recently as government reforms have improved the sentiment. However, the rally is not broad-based. The gains are rotational and driven by different sectors. IT stocks were in the limelight after Infosys and TCS results and, now, oil stocks after government decided to deregulate fuel prices,” said Andrew Holland, CEO, Ambit Investment Advisory.
The BSE mid-cap index ended 0.23%, or 16.79 points, lower at 7,165.46 on Friday, while the small-cap index declined 0.52%, or 38.84 points, to settle at 7,370.34. Market breadth was weak, with 1,331 stocks declining on the BSE compared with 971 advances, indicating that it would be difficult for the market to sustain its momentum in the coming week.
The government on Thursday had allowed PSU OMCs to increase diesel prices by a small margin with an aim to reduce the oil subsidy burden. The government had asked OMCs to hike diesel prices by 50 paise per litre monthly from Friday. Oil stocks rallied for a second