Market makes most of oil fall, eyes rate cues

MUMBAI: After being flat for most part of day, equities ended higher on Monday as buying intensified in interest rate sensitive infrastructure and banking stocks.

Otherwise-cautious investors also overlooked Index of Industrial Production data for June to be released on Tuesday.

Stocks opened with a gap-up tracking US and Asian markets which surged after crude oil declined to $115.20 a barrel, a fall of around 4 per cent on Friday. However, on-going tensions between Russia and Georgia saw oil prices rebound on concerns of disruption of supplies from the region. US light, sweet crude for September delivery advanced to $116 per barrel in today's trade.

Global economy has been under tremendous pressure since oil shot up to $147.35 from $80 per barrel in less than a year. This has led to spike in inflation and slowdown.

Investors saw the downtrend in oil prices as an indicator that interest and inflation rates may have peaked and some relief would be seen in next few months.

Sectorwise, interest rate sensitive stocks fronted the rally. BSE Realty Index ended 5.27 per cent higher at 5,799.37 and BSE Bankex closed at 7,702.35, up 4.16 per cent.

"Banking stocks have under-performed so far and there was value-buying opportunity available. Most PSU banks were below their forward looking book value. There was a perception that we may see inflation rates easing by year-end followed by general feeling that we may see end to interest rate hikes," said a banking sector analyst from a local brokerage.

Bombay Stock Exchange's Sensex closed at 15,503.92, up 336.10 points or 2.22 per cent from the previous close. It touched a high of 15,520.71 and low of 15,367.97 during the day.

National Stock Exchange's Nifty ended at 4620.40, up 90.9 points or 2.01 per cent. The broader index touched a high of 4625.20 and low of 4529.35 intraday.

"4615 is a crucial level for Nifty and if after IIP figures it sustains this level we may see a further rally. But if it fails to sustain, there are more chances of broad-based profit booking which may take Nifty to below 4500," said Satish Kannav, technical analyst, at Arihant Capital Services.

BSE Midcap Index ended 1.63 per cent higher at 5,982.68 and BSE Smallcap Index closed at 7,271.35, up 1.25 per cent.

On the other hand, BSE IT Index ended flat-to-negative at 3,882.07.

Biggest Sensex gainers were Jaiprakash Associates (7.68%), Reliance Infrastructure (6.86%), ICICI Bank (5.74%), Maruti Suzuki (5.27%), State Bank of India (4.65%) and ONGC (3.7%).

Losers comprised Sterlite Industries (-2.24%), Tata Consultancy Services (-1.06%), Tata Steel (-0.98%) and Infosys Technologies (-0.58%).

Market breadth was positive on the BSE with 1,738 advances and 970 declines.

European markets were trading higher tracking global cues. FTSE was up 0.98 per cent, CAC 40 gained 0.60 per cent and DAX moved 0.42 per cent up at close of Indian markets.