The cooling off in global oil prices led to a positive start to trade on Wednesday on both the bourses. But it did not last long. After the initial show of strength, National Stock Exchange’s main index Nifty 50 slipped and went into the red territory the first hour. But a sharp rise in the stocks of oil marketing companies, with some gaining between two and four per cent brought the index back into the green area. Helping the index along the way was the rise in large banking stocks.
Nifty finally ended the day with a gain or 23.05 points of 0.21 per cent at 10,840 while the Bombay Stock Exchange’s Sensex 30 index closed at 36,563.88, an increase of 82.79 points or 0.23 per cent.
The sector which witnessed a spike in prices was cigarette stocks like ITC and Godfrey Phillips after the announcement by Finance Minister Nirmala Sitharaman on banning of e- cigarette, few minutes before the close of the markets. While the stock of Godfrey Phillips ended the day with gains of 5.55 per cent at Rs 990, ITC gained 1.03 per cent at 239.60 on the BSE.
The market breadth – number of shares in green territory compared to red -- was positive, though those in the green did not gain too much. However, those in the red dropped by larger amounts, indicating that profit-booking was high on agenda of investors in the mid-cap space.
The volatility is likely to remain high in near term as news flow from international market on oil prices is still not very supportive. Saudi Arabia, which saw a drone attack on one of its biggest oil processing fields, may still take a couple of weeks to get back to normal production. The other factor which would add to volatility would be the expiry of the weekly contract on Thursday, both of Nifty and Bank Nifty.
After many weeks, this weekly expiry would come when the two indices have witnessed some gains which make them prone to bout of profit booking, and therefore, increased volatility. Amongst the sector which witnessed action on Wednesday were hotel stocks which gained in the hope that the threshold rate at which GST is levied, at 28 per cent, would be increased from Rs 7,500 to Rs 10,000 which would bring relief to both hotels and tourist. This may help hotels improve their number in the second quarter of this fiscal year.
The sector which would remain in focus is metals, as there was indication that the United States and China could be making some headway in trade talks. Though metal stocks have less weightage in the broader market indices, yet, given the fact that they have wide ownership the move is likely to be positive in metals when markets open on Friday.