Monday, June 27, 2011

Diesel price hike: Government's decision on fuel prices may temper market gains next week

MUMBAI: Indian shares performed the best in Asia on Friday after Europe pledged to rescue Greece, China hinted that it may be nearing the end of monetary tightening, and crude prices fell. Stocks rallied across the globe, but the government's late evening decision to raise diesel and cooking gas prices and investors' worry about the wobbly Italian finances may temper gains next week.

Twenty-eight of the 30 Sensex constituents rose, with top five stocks such as Infosys Technologies and State Bank of India leading the gains.

"The recent drop in commodity prices, including crude oil, and hope of settlement of the Greece issue have given comfort to investors, resulting in the bounceback of India's underperforming markets," said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance.

The BSE's 30-share Sensex rose 513.64 points, or 2.89%, to 18,240.68, its first weekly gains this month. The NSE's 50-share Nifty gained 151.25 points, or 2.84%, to 5,471. Gainers outnumbered gainers 1,984:852 on the BSE.

Stocks advanced across the globe as investors cheered the European Union's commitment to bail out Greece if Prime Minister George Papandreou pushed through austerity measures. Chinese Premier Wen Jiabao wrote in Financial Times that prices are "within a controllable range" and may decline "steadily".

Crude oil eased after the International Energy Agency said members will release 60 million barrels, equivalent to three days of US demand, from strategic reserves. Goldman Sachs and CLSA cut price targets for crude. Stocks in Asia rose and were higher in Europe. The S&P Futures also gained.

The MSCI Emerging Markets Index was 1.1% above its previous close. "If crude prices continue to soften in the next few days, the market may add to its gains," said Sanjeev Zarbade, veep, Kotak Securities. India is among the 10 worst-performing global markets along with Tunisia and Egypt, falling 11%. Global investors, who poured $29 billion into Indian equities last year, have net invested just $52 million this year, lower than Pakistan's $72.8 million.

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