Indian Markets Cheer Government's Bold Decision

The Indian markets have given a thumbs-up to the government’s bold decision to go ahead and give its informal nod to the domestic oil refiners to increase the retail petrol prices and recoup their losses on unsubsidised and decontrolled fuel. The Sensex closed at 16222.3, up by 274 points or 1.74%, while the Nifty closed at 4921.4, up by 85.75 points or 1.77%. This recent hike in retail petrol prices has also raised hope in the markets that a consideration for hike in diesel and LPG prices could be on the agenda very soon.

The peer Asian markets, however, closed on a mixed note today. This was after data showed Chinese manufacturing activity slowing down at a faster pace in May 2012 than in April 2012, as conditions for exporters worsened during the month, according to the preliminary findings of a survey by HSBC. The reading of the manufacturing Purchasing Managers' Index dropped to 48.7 in May 2012 from a final print of 49.3 in April 2012.

In Europe, bargain hunters stepped in to pick up the beaten-down bank and energy stocks, helping investors shake off the downbeat economic data and a disappointing European Union leaders meeting.

Dow Jones Futures is currently trading 33 points or 0.27% higher at 1220, indicating a sideways opening to the US markets. Investors there are in anticipation of reports that may show a climb in the orders for durable goods and the initial jobless claims held steady in the world’s largest economy.

Back home, among the sectoral indices, Bankex was the winner, rallying by a hefty 2.3%. The Oil & Gas index was also up by nearly 2% owing to a spurt in the shares of ONGC, Oil India and Petronet LNG. ONGC and Oil India surged as concerns about their subsidy sharing burden eased following reports that the government will discuss raising diesel and LPG prices soon, in line with the petrol price hike. OMCs, however, reversed their initial gains, as reports came in that the government may direct PSU OMCs to partially roll back the steep hike in petrol prices.

IT company, Tech Mahindra, emerged as the top gainer today. Its shares rallied by nearly 9% after the company announced a better-than-expected Mar 2012 quarter performance. Bharti Airtel, India's largest listed telecom services provider by subscribers, surged over 5% after the company said that it has signed an agreement with Qualcomm to acquire an interest in Qualcomm Asia Pacific's Indian BWA entities. BHEL declined as the company's order backlog declined 18% to Rs 134681 crore as on Mar 31, 2012 from Rs 164130 crore as on Mar 31, 2011. The Auto shares were a mixed fare. Banking and Telecom stocks rose. Among the 30-share Sensex pack, 25 advanced while the rest declined. The shares of HDFC (up 4.45%), ICICI Bank (up 3.22%) and Hindalco Industries (up 3.21%) edged higher.