Hope of fuel price hike drives refinery stocks

• Volatility zoomed as the key benchmark indices oscillated both ways in mid-morning trade with the undertone remaining weak weighed by a steeper than expected rate hike by the Reserve Bank of India on Tuesday and a sustained selling drive by foreign institutional investors. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty had dropped to 5 week lows.

• The BSE 30-share Sensex was down 47 points or 0.28% to 18,482.74. US index futures and Asian markets were trading lower.

• Index heavyweight Reliance Industries (RIL) turned positive in a volatile trade after a lower start.The stock rose0.41% to Rs 947.90 after gyrating between Rs 951.60 and Rs 940 so far during the day.

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• Interest rate-sensitive auto shares extended Tuesday’s decline. Banking pivotals were mixed after suffering a steep decline on Tuesday.

• The market breadth, indicating the health of the market, was weak. On BSE, 829 shares advanced while 1578 shares declined. A total of 88 shares remained unchanged.

• Among the 30-member Sensex pack, 22 declined while the rest of them gained. Jaiprakash Associates (down 2.41%), Jindal Steel and Power (down 2.21%), and Bharti Airtel (down 2.09%), edged lower from the Sensex pack.

[caption id=“attachment_4254” align=“alignleft” width=“380” caption=“ONGC was the top gainer from the Sensex pack today. Reuters”]  [/caption]

•India’s largest oil exploration firm by sales Oil & Natural Gas Corporation (ONGC) gained 1.83% to Rs 300.65 on reports the company is likely to come out with its Rs 12,000 crore follow-on public offer in early July 2011. It was the top gainer from the Sensex pack.

• Refinery stocks across the board have increased with hopes of a price hike in petrol and diesel prices in the near future. BPCL was up 5.21%, HPCL was trading higher by 3.5% while IOC was up by 2.91%. With elections in Bengal nearing an end, the market is expecting a fuel price hike immediately after the last phase is over.

• India’s largest bank by net profit and branch network SBI rose 0.54% on bargain hunting after sliding 11.96% in previous five trading sessions. The bank will review its interest rates next month, the bank’s Chairman Pratip Chaudhuri said on Tuesday after the central bank raised interest rates by a sharper-than-expected 50 basis points.

• IDBI Bank slipped 0.77%. The bank on Tuesday increased lending and deposit rates by up to 50 basis points soon after RBI’s monetary policy action.

• Meanwhile Bank of America Merill Lynch has reduced India’s GDP forecast to 7.8% and expects interest rate to be increased further by 50-75 basis points by October.