By Rutam Vora, Commodity Online
Indian markets opened higher with most commodity stocks trading in positive territory this morning. The markets, however, remained swinging between gains and losses in the morning trading hours today.
While those among commodity stocks including metal, sugar, cement and rubber stocks traded with positive mark on Monday, July 05, 2010, oil & gas stocks remained weak with Reliance Natural Resources Ltd (RNRL) (BOM:532709) falling by 26.24% due to unfavourable swap ratio for its merger with group company Reliance Power Ltd (BOM:532939), which gained by close to 3% on the Bombay Stock Exchange (BSE) today.
RBI move drive market sentiments
India’s central bank, Reserve Bank of India (RBI) on Friday, hiked the repo rate by 25 basis points to 5.5% from 5.25% and reverse repo rate, at which it absorbs excess cash from the banking system, by an equal 25 basis points to 4% from 3.75%, with immediate effect.
The step is believed to address shooting up inflation and anchor inflationary expectations going forward. The central bank had said that the latest rate hike is a part of the calibrated exit from the expansionary monetary policy. This mid-cycle policy action has been warranted by the evolving macroeconomic situation, it said.
However, the central bank move is believed be justified in terms of long-term fiscal and energy conservation objectives, the recent increase in fuel prices will have an immediate impact of around one percentage point on inflation based on wholesale price index (WPI), with second round effects also being felt in the months ahead, the Reserve Bank of India said.
Significantly, two-thirds of WPI inflation in May 2010 was contributed by non-food items, suggesting that inflation is now very much generalized and that demand-side pressures are evident, the RBI said.
Meanwhile, the benchmark index, Sensex traded at 17469.48 points up by marginal gains of 0.05% in the early trading hours on BSE today.
European markets may trigger buying sentiments
The road ahead for the markets seems positive for the remaining trading hours on Monday. According to analysts, markets look in a range-bound position mainly on the back of mixed cues from global markets. However any trigger from European markets may improve sentiments on Indian bourses and may give some room for trading opportunity.
Metal stocks set firm
The sectoral index, BSE Metals was marginally up with gains of 0.32% from its Friday’s close. Metal stocks including copper majors, Sterlite Industries (India) Ltd (BOM:500900) and Hindustan Copper Ltd (BOM:513599) inched ahead with gains of 0.75% and 0.21% respectively on Monday.
Copper futures on LME were trading higher Monday on short covering and increased buying after last week's decline.
Copper products maker, Nissan Copper Ltd (BOM:532789) zoomed up extending gains of last week at Rs.62.70 up by 6.45% from its previous close. Other metals gainers included Jai Corp Ltd (BOM:512237) and iron ore miner, Sesa Goa Ltd (BOM:500295).
Sugar stocks maintain sweetness
Most of the sugar stocks maintained uptrend on the Bombay Stock Exchange (BSE) during early trades on Monday. While Shree Renuka Sugars Ltd (BOM:532670), Dhampur Sugar Mills Ltd (BOM:500119) and Oudh Sugar Mills Ltd (BOM:507260) posted gains of around 0.5% each, EID Parry (India) Ltd (BOM:500125) and Bannari Amman Sugars Ltd (BOM:500041) posted handsome gains of over 1.5% each on the BSE today.
Sugar futures on ICE ended higher Friday amid expectation that demand would rise in coming months. Back home in India, rains lashing across the country, seemed to have improved crop scenario for sugar cane.
Rubber stocks positive
At most places in Kerala received heavy rains on Sunday raising hopes for better plantation this year. Kerala is the main land for rubber cultivation in India, which includes main plantation districts of Kerala, Idukki and Wayanad.
Though heavy rains inundated several low lying areas there has been no major threat to crop so far, growers said. Tapping of rubber is yet to pick up because of rains in growing areas.
Tyre and other rubber products makers, JK Tyre & Industries Ltd (BOM:530007) and Goodyear India Ltd (BOM:500168) gained over 1% each on BSE, while Govind Rubber Ltd (BOM:509148) zoomed up by close to 6% on Monday.
Oil & Gas stocks stay dizzy
Oil stocks on the Bombay Stock Exchange (BSE) today saw selling pressure. The oil and gas index declined 0.44 per cent in the morning trades today. Crude oil futures on NYMEX were trading higher Monday on short covering after prices dropped sharply last week.
Pit trading on the floor of NYMEX will not take place today because of U.S. Independence Day holiday.
Anil Dhirubhai Ambani Group's (ADAG's) gas transportation company, Reliance Natural Resources (RNRL), will merge with sister firm Reliance Power (R-Power) in a Rs.50,000-crore, all-stock deal. The board of directors of the two companies, in meetings held on Sunday, approved a swap ratio of 4:1.
While Reliance Industries Ltd (BOM:500325) maintained positive territory, other exploration majors including Oil India Ltd (BOM:533106), Oil & Natural Gas Corporation Ltd (BOM:500312) and Essar Oil Ltd (BOM:500134) remained under selling pressure on Monday morning trades.
On the global front, most Asian stocks rose on Monday on optimism the Asian region will continue to grow even as there are mounting concerns about the pace of the global recovery. The key benchmark indices in Japan, Taiwan, South Korea and Indonesia rose by between 0.06% to 0.81%.
US stocks fell on Friday, 2 July 2010 as disappointing jobs data joined other recent evidence pointing to a tepid economic recovery. The Dow Jones Industrial Average dropped 46.05 points, or 0.47% to 9,686.48. US markets remain closed on Monday, 5 July 2010, for Independence Day holiday.
(commodityonline.com)
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