Benchmark indices recovered from early losses to end higher on Tuesday, led by oil-and-gas and IT stocks.

Market opened on a weak note, tracking global cues. However, in the afternoon session it recovered sharply, thanks to the oil-and-gas sector, led by ONGC, due to high oil prices. Positive opening of Europe stocks also lifted sentiment towards IT, consumer durables and bank stocks.

The BSE Sensex closed at 59,744.88, up 445.56 points or 0.75 per cent. It hit an intraday high of 59,778.87 and a low of 59,127.04. The Nifty 50 closed at 17,822.30, up 131.05 points or 0.74 per cent, near its intraday high of 17,833.45. It hit an intraday low of 17,640.90.

Breadth remains positive

The market breadth remained positive with the advance-decline ratio at a healthy 1.7:1. As many as 2,075 stocks advanced on the BSE, as compared to 1,210 stocks that declined while 166 remained unchanged. Further, 515 stocks hit the upper circuit as compared to the 128 stocks that were locked in the lower circuit. Besides, 306 stocks touched a 52-week high and 16 touched a 52-week low.

Vinod Nair, Head of Research at Geojit Financial Services, said, “Domestic equities opened on a weak note as investors turned cautious due to a weak closing of the US market and rising crude oil price. However, the upbeat mood of the European markets, which rebounded after the US tech-based sell-off, helped the Indian market regain momentum. Also, the rout of the Chinese economy, led by power shortage, provided a positive surprise to few sectors in the Indian market.”

Binod Modi, Head Strategy at Reliance Securities, said, “Domestic equities continued to show resilience and extended gains today amid mixed global cues, as expectations of strong September-quarter earnings lifted investors’ sentiments. IT and energy stocks witnessed strong recovery, while financials (excluding PSU banks) also witnessed modest rebound.

“Heavyweight Reliance Industries continued to move higher and supported the market rally. However, pharma and FMCG stocks were laggards. Further, buying momentum remained visible in midcap and smallcap stocks, while value stocks continued to outperform growth stocks.”

ONGC, IndusInd Bank, Coal India, IOC and SBI Life were the top gainers on the Nifty 50, while Cipla, Hindalco, Shree Cement, Sun Pharma and Tata Consumer were the top losers.

ONGC regains ₹2 lakh crore m-cap

ONGC gained focus on the back of higher crude oil prices. The state-run oil exploration and production (E&P) company regained its ₹2 lakh crore m-cap and closed 10.77 per cent higher on the NSE. Its m-cap stood at ₹2,05,68,756.50 at closing.

The 62 per cent hike in natural gas prices by the Indian government will further drive the profitability of upstream companies and support their investment spending, Fitch Ratings said.

“The price for gas from fields that were assigned by the state to oil companies, mainly state-owned Oil and Natural Gas Corporation Limited (ONGC, BBB-/Negative) and Oil India Limited’s (OIL, BBB-/Negative), increased to $2.90 per million British thermal units (mmBtu) for October 2021-March 2022 from $1.79 per mmBtu in April 2021-September 2021. ONGC’s and OIL’s ratings and Standalone Credit Profiles (SCP) remain unchanged as the price increase was largely in line with Fitch’s expectations, driven by the rise in global prices over July 2020-June 2021. However, sustained high gas prices will strengthen ONGC’s ‘bbb+’ SCP and add buffer to OIL’s credit metrics, which will support its capex to expand capacity at subsidiary Numaligarh Refinery Limited,” it said in a note.

“We estimate ONGC’s net leverage, measured by net debt/EBITDA (including ONGC Petro Additions Limited (OPAL) on a fully consolidated basis), will improve to around 2.1x in the financial year ending March 2022 (FY22) from 2.7x in FY21 as upstream earnings recover and downstream earnings stay resilient. Natural gas’ share of consolidated revenues is in the mid-single digits for ONGC, given its integrated business model. We expect OIL’s FY22 leverage to be 1.9x, comfortably within our negative rating threshold, but leverage could come close to our negative sensitivity of 3.0x in FY23, as its capex intensity increases. Natural gas accounted for about 13 per cent of OIL’s upstream revenue in FY21,” it added.

Pharma, realty, PSU bank drag

On the sectoral front, while oil and gas, IT, consumer durables and financials, barring PSU bank, gained, pharma, healthcare and realty stocks dragged.

Nifty Oil & Gas was up 2.77 per cent at closing while Nifty IT was up 1.19 per cent. Nifty Consumer Durables was up 0.72 per cent. Nifty Bank was up 0.43 per cent while Nifty Private Bank was up 0.64 per cent. Nifty PSU Bank was down 0.44 per cent.

Nifty Pharma and Nifty Healthcare Index ended 0.50 per cent and 0.71 per cent lower, respectively. Nifty Realty was down 1.36 per cent.

Broader indices

Broader indices closed in the green.

Nifty Midcap 50 was up 0.68 per cent while Nifty Smallcap 50 was up 0.20 per cent. The S&P BSE Midcap was up 0.33 per cent while the S&P BSE Smallcap was up 0.54 per cent.

The volatility index softened further by 2.01 per cent to 16.40.

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