The Hindu Business Line : Crude prices have a bearing

THE stock price of companies in the oil and refining sector came under heavy selling on Thursday. Among the stocks registering price dip were IOC, BPCL, HPCL and RIL. Even stock prices of companies such as Bongaigaon Refinery and Mangalore Refinery also closed lower.

Dealers said the selling in these companies is due to the rise in the international crude prices, which crossed $ 38/barrel. Market talk is that the oil companies will not able to pass on the rise in the crude price to its customers till the time elections are over. This is likely to affect the profitability of these companies. The buzz is that the price of crude is to rise further later this month, further affecting the profitability of these companies.

Corporate houses spoil the game

THE market is buzzing with the talk that the current fall in stock prices is due to selling by mutual funds (mainly due to dividend stripping) and FIIs.

However, the figures released by SEBI did not show much selling by them. In fact they are net buyers during this week and for the entire month. So who are pulling the market down? If the market talk is to be believed, the selling is by two corporate houses, which were involved in depressing the market last month, when the Government divestment process was on. Dealers said with low volume in the market even small selling by them is leading to fall in the stock prices.

These two corporates are understood to be selling blue-chip stocks, which are part of the key indices such as Sensex and Nifty. This week's selling, including on Thursday, was mainly by them, dealers said. This week Sensex is also down by 285 points and the talk is that fall is likely to continue.

Defensive play

AT a time when there is selling in most of the blue chip stocks, institutional investors and intelligent investors are using HLL and HDFC stocks as defensive play.

Dealers said there was select buying by institutional players in these two counters on Thursday. The institutions are buying in these stocks as they fall much less than the overall market in the bearish market sentiment.

On Thursday, HDFC gained 1.72 per cent on the BSE with volume of 3.64 lakh shares and on the NSE, it closed at Rs 601.40, up 2.59 per cent with volume of 1.84 lakh shares. HLL gained 0.56 per cent at Rs 144.80 on the BSE with volume of 44.22 lakh shares and on the NSE, it closed at Rs 145.15, up 0.76 per cent with volume of 32.38 lakh shares.

Virendra Verma

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