The Indian Stock Market on Friday opened muted after the government announced price hike in petrol, diesel and CNG in order to curb the crisis due to tensions in West Asia.
At open, Sensex and Nifty traded modestly higher. Sensex was up 100.65 points or 0.13 percent at 75,499.37, while the Nifty gained 55.50 points or 0.23 percent to 23,745.10. Gains were led by gains in IT and auto stocks, while metal and banking shares remained under pressure.
GIFT Nifty was trading at 23,678 in early morning trade, down 51 points or 0.22 percent from the previous close, indicating a mildly negative start for benchmark indices.
Theshare prices of state-run oil marketing companies(OMCs) declined on Friday even after the petrol and diesel prices were raised across the country. Petrol price was hiked to Rs 97.77 per litre from Rs 94.77 in the national capital. Diesel now costs Rs 90.67 as against Rs 89.67 per litre previously. The increase has pushed fuel prices above Rs 100 per litre in several cities like Mumbai, Kolkata, and Chennai.
After the price hike, shares of Hindustan Petroleum Corporation Limited fell 2.65% to hit an intraday low of Rs 367.10, Bharat Petroleum Corporation Limited declined 2% to Rs 289.05, while Indian Oil Corporation slipped 0.6% to its day’s low of Rs 139.35.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said, "The 789 point rise in Sensex yesterday was mainly triggered by short covering. FIIs were positioned heavily on the short side. There are rumours of measures to shore up the rupee and attract capital into the economy. We will have to wait for clarity on this.
The decision to increase the price of petrol and diesel by Rs 3 a litre and CNG by Rs 2 a kg indicate that the government is playing it safe through small increases, perhaps stage by stage, without triggering a sharp spike in cost-push inflation. This is a welcome step."
"There are some trends in the market which investors have to watch. The market is responding hugely positively to good Q4 results with double digit price rises in some cases, and punishing poor results with double digit price crashes in some cases. This reflects the gap in market expectations and actual results. Another important trend is the continuing weakness in IT stocks and sustaining strength in pharmaceuticals stocks. This reflects the market perception of the prospects of these sectors in the present challenging environment."
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