The key Indian stock indices have advanced modestly in late morning of trade, with the sentiment underpinned by the sharp hike in petrol prices overnight and a late recovery on Wall Street. The steep increase in petrol prices have sparked hope of more reform-oriented measures from UPA II as the Budget session of parliament is over now. Whether these expectations are met or not will be known in the coming days, but for now the mood is slightly better.
Shares of public sector oil marketing companies (OMCs) have risen expectedly on the back of the hike in petrol prices but automakers are down amid concern about a possible negative impact on consumer demand.
The early gains are limited and there is a possibility of the same getting reversed as the Rupee remains under pressure. The local currency is still trading below the 56 per dollar mark. Also, a 'flash' manufacturing PMI for China has come in lower than April's final reading. Separately, EU leaders have failed to reassure world markets about Greece's fate in the euro currency bloc and ongoing efforts to quell the long-running debt crisis.
At 11:23am (IST), the BSE Sensex was 15,995, up 47 points over the previous close. It had earlier touched a day’s high of 16,064 and a day’s low of 15,934.It opened at 16,033.
NSE Nifty was quoting 4,848, up 14 points over the previous close. It has earlier touched a day’s high of 4,867 and a day’s low of 4,830. It opened at 4,863.
Among the broader markets the BSE Small-Cap index rose almost in line with the Sensex up 0.2% and the BSE Mid-Cap was trading nearly unchanged.
Among the sectors, Oil&Gas was expectedly the biggest gainer on the back of the petrol price hike, up 1.2%. Bankex, PSU and Teck indices were the other gainers.
Realty, Auto, Consumer Durables, Power, Pharma and Capital Goods were the losing indices.
ONGC, HDFC, BPCL and GAIL, Ranbaxy Labs, Axis Bank, Bank of Baroda and Asian Paints were among the notable leaders in the Sensex and the Nifty.
Maruti Suzuki, JP Associates, Tata Power, Bajaj Auto, Sun Pharma and Hero MotoCorp were among the notable losers in the Sensex and the Nifty.
The steep hike in petrol prices has fueled public outrage even as the move has sparked some hope on long-pending reforms. A petrol price hike is easier vis-à-vis other fuels. So, it remains to be seen whether the Government can do an encore as far as other fuels are concerned. That call is politically sensitive for UPA II, but given the elevated fuel subsidy bill it has little choice. What’s more, the Rupee’s sharp fall has more or less negated a steady decline in crude oil prices. Still, one must wait and watch as UPA II’s track record on reforms has been disappointing and some rollback is also anticipated.
Asian markets are mostly down today but not by a great deal while the US stock markets recovered smartly.
European equities slid though on Wednesday on persistent worries over the fate of Greece within the eurozone and its unpleasant impact on global economy.
European leaders clashed over the sticky issue of euro bonds at an informal EU summit in Brussels yesterday. They also called on Greece to stick with austerity measures needed to stay in the euro. While the summit yielded little in terms of new policy announcements and no deal on euro bonds, it did include further commitments on keeping Greece within the euro zone.
China’s provisional manufacturing PMI for May has come in weaker than April’s final print. The HSBC Flash Purchasing Managers Index (PMI) retreated to 48.7 in May from a final reading of 49.3 in April. It marked the seventh consecutive month that the HSBC PMI has been below 50, indicating contraction.
The global backdrop is fragile but few more bold policy actions from the Centre can nullify that. The Nifty is likely to remain in a narrow range of 4788-4860 and waiting for a breakout.
Key Results Today: Central Bank of India, Gujarat Alkalies, Gujarat State Petronet, Jai Corp, Jet Airways, JM Financial, Madras Cements, Max India, Man Industries, MCX, Novartis India, Orbit Corp, Pidilite Industries, Reliance Power, Shasun Pharma, TVS Motor and Voltas.
Trend in FII flows: The FIIs were net sellers of Rs.3.61bn in the cash segment on Wednesday while the domestic institutional investors (DIIs) were net buyers of Rs.1.68bn, as per the provisional figures released by the NSE.
The FIIs were net buyers of Rs 1.64bn in the F&O segment on Wednesday, according to the provisional NSE data.
Global Data Watch today: China HSBC Manufacturing PMI (May), Bank of Japan Monthly Economic Survey, Germany Q1 GDP, Germany Retail Sales (Apr), Germany PMI Services (May), Germany PMI Manufacturing (May), EU PMI Services (May), EU PMI Manufacturing (May), Germany IFO Business Climate (May), UK Q1 GDP, UK Total Business Investment (Q1), UK Index of Services (Mar), US Durable Goods Orders (Apr) and US weekly Jobless Claims (May 19).