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Sensex shrugs off high oil
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ASIANAGE on 04 July, 2008 02:47:25
 
By Our Special Correspondent
Mumbai
July 4: The market on Friday shrugged off the high crude price and the slightly
negative cues from the Asian markets and opened flat but positive and within 40
minutes rallied up nearly 200 points.
By noon when the inflation figures were out on the lines that the street
expected, the Sensex spurted further to close 360 points up at 13,454.
"It was not a bounce back but it could last for a while as there has been
buying at lower levels since Thursday," said Mr Ambareesh Baliga, adding that
the "big boys are coming back to the market slowly."
Market sources say that the FII selling could be moderate, as the pressure
faced by hedge funds from redemptions has reduced since June. The market is
looking forward to the start of the earnings season next Friday and a section
believes that the results could be decent since the advance tax payment was
good. Friday saw a decent turnover at Rs 62,387 crore with Rs 44,222 crore in
the F&O sector. There were 893 stocks that closed positive on the NSE and 362
negative.
It was a happy ending to a really bad week that saw the Sensex down 2.5 per
cent for the week and the Nifty down 3 per cent.
Among the stocks that lost heavily are Maruti down 14 per cent. ACC 18 per
cent, Tata Steel and Sail 11.5 per cent, Adlabs 20 per cent and Bhel 8.5 per
cent.
Ticking off points in favour of the market, Mr Alok Agarwal, head, research
K.R.Choksey said "the fact that the market cap to GDP ratio is below one means
the market is not overvalued and the market cannot be ignored for too long. The
downside is limited," he said. The positive trend witnessed in the market on
Friday shows that the negative flow of news has reduced. But he cautioned that
this was not a wholesome recovery.
Crude is still hovering around $145 a barrel. On the political front the
situation could be easing with the Samajwadi Party announcing its support in
principle to the Congress.
Mr Agarwal feels that if the nuclear deal goes through the FIIs could be back
as it could herald an era of less dependence on oil in the long term. The crude
scenario is very uncertain with Israel and Iran making threatening noises. Iran
had said on Friday that any attack on it would be a war.
"Oil prices are more about geo-political tensions," said Mr Faiyaz Hudani,
research analyst at Kotak Commodities Services Ltd.
Iran said any attack would disrupt oil supply since 40 per cent of the crude is
transported through the Straits of Hormuz.