statesman news service
MUMBAI, 28 JUNE: A jubilant stock market today gave a thumbs-up to the doubling of gas prices from 1 April 2014 as Dalal Street analysts described it as a major reform that would not only give a boost to the oil and gas sector but would also elicit positive response from potential investors.
The splendid stock rally that lifted the S&P Bombay Stock Exchange Sensitive Index by 519.86 points or 2.75 per cent to end the day at 19,395.81 and took CNX Nifty of National Stock Exchange beyond 5,800-mark to close at 5,842.20, up 2.81 per cent or 159.85 points was led by heavyweights Reliance Industries and Oil and Natural Gas Corporation.
In tune with the surge in stocks, the rupee today rose by a staggering 80 paise to close beyond the 60-mark at 59.39 amid signs of strong fund inflows on hopes that the US Fed will not begin tapering monetary stimulus soon.
The foreign exchange reserves dipped by $2.81 billion to $287.84 billion for the week ended 21 June. Yesterday by the Reserve Bank of India reversed the rupee depreciation although currency market dealers fear the currency may wilt under the pressure of external debt which in the central bank’s view is uncomfortably high.
Another reformist move by the government to set up a regulator to monitor cola supply and pricing helped Coal India Limited to close with handsome gains. Apart from domestic confidence building measures, helpful global cues from the United States and China also worked wonder to make markets regain confidence.
The mood on Dalal Street was upbeat since the opening bell. The indices opened with substantial positive margins paving way for, as analysts sensed, a “blockbuster session” on the weekend. Significantly the markets ended when the benchmarks were at their peaks. A robust defence of gas price hike came from Mr C Rangarajan whose panel proposed it. He said: “There is nothing wrong in fixing gas prices in line with international prices.” The panel lays down a road map for the progressive gas price changes for the next five years. As the much discussed measure have been finally settled, the stock and money markets were quick to give it a overwhelming approval.
In the morning session, RIL, ONGC and Oil India stocks zoomed to their day’s high. Metal, capital goods and other sectors joined the rally as investor confidence grew. International agency CLSA’s report says that RIL will be the “neatest beneficiary” of price hike as it will reinforce investor confidence in its E&P business proposals.
Although oil and gas sector shares pared their gains later the rally was sustained by other stocks. In Sensex 29 shares advanced and just one (Hindustan Unilever) was down. The top gainers included Jindal Steel at Rs 217.30 (7.89 per cent), BHEL Rs 174.70 (6.90 per cent), Coal India Rs 302.95 (5.58 per cent), GAIL Rs 313 (4.75 per cent), RIL Rs 861.85 (3.78 per cent and ONGC Rs 330.10 (2.98 per cent). In the Nifty 47 shares advanced and three declined.