The Hindu Business Line : Shines on crude price fall

The gains in the stock prices of these companies were due to a fall in international crude prices, which fell to $62.23 per barrel, a two-month low. Dealers said the fall in crude price was welcome news for most of the oil marketing companies. They said with this fall the subsidy burden taken by them would fall and in turn result in lower losses. Most of the oil marketing companies suffered losses in the June quarter due to the high subsidy burden. The talk is that fall in crude price and a hike in petroleum products by the Government recently could offset some of the losses suffered by them. If the oil falls below $60 and even if the Government does not increase the oil price, some of the companies could report profit in the December quarter.

On Thursday, the stock price of IOC rose 4.62 per cent to Rs 472.05 on the BSE; HPCL closed at Rs 327.95, up 1.8 per cent; BPCL rose 3.27 per cent at Rs 425; and IBP was up 3.07 per cent at Rs 510.20.

Downgrade takes toll

THE counter of Tata Steel was among the worst performers in the index stocks. It closed at Rs 403.90, down 4.84 per cent with volume of 28.63 lakh shares on the BSE and on the NSE it closed at Rs 403.75, down 4.87 per cent with volume of 65.89 lakh shares.

Dealers said the fall in the stock price was partly due to downgrade of the stock from overweight to neutral by a foreign broking firm. The downgrade of the stock was on its expectation of fall of earnings from next financial year. It estimates that net profit of the company to fall by 7 per cent in 2006-07 and 27 per cent in 2007-08. The valuation of the stock is also at the same level compared to its peers.

Big players offload futures

THE sharp fall in the Nifty and Sensex was partially due to large scale selling in Nifty futures. Dealers said several big players in the derivatives market offloaded their positions and some short sellers also joined them. The heavy sell-off in Nifty futures was seen from rise in open interest in Nifty October futures contracts by 18 per cent (38.78 Nifty). The buzz is that some of the bear traders would have offloaded their position due to weak sentiment.

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