Sensex up 238 points intraday; Nifty above 17,700, led by oil and gas stocks

Our Bureau Mumbai | Updated on October 05, 2021

Pharma, realty under pressure; ONGC gains focus

Benchmark indices were trading with marginal gains during the afternoon on Tuesday, led by oil and gas and auto stocks.

Market opened on a weak note, tracking global cues. Asian market slumped nearly 1 per cent on Tuesday amid inflation woes, following rising oil prices and sell-off in big tech stocks in the US markets. US stocks ended sharply lower, with all three key indices contracting 1-2 per cent in the overnight session. Indices managed to recover slightly from early losses by afternoon as oil and gas stocks, primarily ONGC, gained focus amid high oil prices.

At 1 pm, the BSE Sensex was trading at 59,537.26, up 237.94 points or 0.40 per cent. It hit an intraday high of 59,542.69 and a low of 59,127.04. The Nifty 50 was trading at 17,763.05, up 71.80 points or 0.41 per cent. It hit an intraday high of 17,763.55 and a low of 17,640.90.

ONGC, IOC, Coal India, IndusInd Bank and Tata Motors were the top gainers on the Nifty 50, while Cipla, Shree Cement, Hindalco, Sun Pharma and Dr Reddy’s were the top laggards.

ONGC regains ₹2 lakh crore m-cap

ONGC gained focus on the back of higher crude oil prices. Top gainer on the Nifty 50, the state-run oil exploration and production (E&P) company regained its ₹2 lakh crore m-cap and was trading 9 per cent higher intraday.

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 (OIL, BBB-/Negative), increased to USD2.90 per million British thermal units (mmBtu) for October 2021-March 2022 from USD1.79 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 drag

On the sectoral front, while oil and gas, auto and metal stocks gained, pharma, healthcare, realty and PSU bank stocks dragged.

Nifty Oil & Gas was up 1.94 per cent while Nifty Auto was up 0.70 per cent. Nifty Metal was up 0.47 per cent.

Meanwhile, Nifty Pharma and Nifty Healthcare Index were trading 0.58 per cent and 0.76 per cent lower, respectively. Nifty Realty was down 0.94 per cent while Nifty PSU Bank was down 0.24 per cent.

Broader indices

Broader indices continued to outperform the benchmarks.

Nifty Midcap 50 was up 0.73 per cent while Nifty Smallcap 50 was up 0.47 per cent. The S&P BSE Midcap was up 0.44 per cent while the S&P BSE Smallcap was up 0.68 per cent.

The volatility index softened 1.62 per cent to 16.46.

Published on October 05, 2021

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