Mkts up as crude dips below $125

Written by Markets Bureau | Mumbai, Jul 30 | Updated: Jul 31 2008, 05:58am hrs
Key-Indian equity indices made a gleaming bounce-back on Wednesday, on the back of strong positive global cues, decline in global crude prices and short covering ahead of expiry of July derivatives contract on Thursday. The 30-share Sensex of the Bombay Stock Exchange (BSE) gained 495.67 points or 3.59% before closing the day at 14,287.21 points. While S&P CNX Nifty of the National Stock Exchange (NSE) added 123.70 points or 2.95% and finally closed the day at 4,313.55 points. Following the overdose of hike in the key rates Sensex and Nifty posted a loss of 557.57 points (3.89%) and 142.25 points (3.28%) respectively on Tuesday.

Dealers in the market sense that as of now worse is over and crude prices which are over $120 per barrel, should rule under two digits by October this year and markets may see some stability in the coming days. The oil slipped to $122 per barrel at the NYMEX, in the intra-day trades, giving thrust to the markets across the globe.

Amitabh Chakraborthy, president-equity, Religare Securities said, "The volatile session we saw on Tuesday was owed to the hike in CRR and repo rate. Now, when the oil prices are coming down, we dont see any further monetary measures by the regulator." He further added that, in the last two weeks we have seen inflation remaining stable, so we expect that now the inflation will start coming down.

Ahead of the expiry of the derivatives contract for the month of July, investors covered their short positions, however a good amount of short positions were carried forward to the next month, dealers said. The Nifty July contract ended the day at 4,327 points, a premium of 13 points with respect to the spot price. "The rollovers are expected to be higher for the month of July mainly on the back of the short positions carried by the investors. We might see the contract to end on a positive note and Nifty may touch 4,400," added Chakraborthy.

Deven Choksey, MD, KR Choksey Securities said, "I think that market over reacted on Tuesday after the hike in CRR and repo rate. But now with all the global cues being positive and crude price coming down I see that the worst is over. But we need the markets to remain steady in the coming days before we see some new investors entering in the markets."

Realty and banking sector were worst hit on Tuesday after the hike in CRR and repo rate, but there was genuine buying in both the sectors on Wednesday which resulted in both the sectors ending in the positive territory. Barring FMCG, all the sectoral indices on the BSE ended on the encouraging note.

The foreign institutional investors (FII) were net sellers at Rs 628.47 crore, while domestic institutional investors (DIIs) were net buyers at Rs 672.12 crores. The strong bounce back was visible from the strong Sensex breadth as 28 of the 30 stocks advanced while two ended in red. The overall breadth of the market was also positive, as 1,784 shares advanced, 857 shares declined and 83 remained unchanged at the BSE.