Domestic indices spurt as crude prices recoil

Local frontline indices are trading with renewed vigor in the mid afternoon session of trade as buying in blue chip stocks gathered greater momentum after the international crude oil prices pared all the intraday gains and extended their weak run after trading at elevated levels in the recent past. The local sentiments also got filliped by encouraging leads from across the globe as Asian benchmarks traded with conviction with Japanese and Chinese indices gaining around a percent point each, while the European counterparts too mirrored the optimistic tone and traded with around half a percent gains. On the sectoral front, Capital Goods counter grabbed the top gainer's position after accumulating 2.30% points on the back of 4.51% gains in heavyweight Siemens India while stocks like L&T and BHEL too surged by 2.86% and 1.13% respectively. The rate sensitive Auto and Banking pockets too remained amid the thick of things after garnering around two percentage points while among individual stocks market bellwether Infosys surged over a percentage point on expectations of a strong quarterly earnings performance. Index heavyweight Reliance Industries too made its presence felt in the session as it amassed 1.30% in the session so far.

Meanwhile, the broader markets too witnessed hefty buying interests and are trading with gains of over a percent, slightly outperformed by their larger peers. The market breadth on the BSE was strongly in favor of advances in the ratio of 1869: 946 while 111 scrips remained unchanged. Moreover, the market volumes have already crossed the volumes of Rs 1 lakh crore mark, way higher that the turnover of Rs 0.90 lakh crore, registered in the previous session. 

The BSE Sensex garnered 337.99 points or 1.75% at 19,600.53. The index touched a high and a low of 19,625.69 and 19,101.63 respectively.

The BSE Mid-cap and Small-cap indices soared 1.21% and 1.13%, respectively.

On the BSE sectoral front Capital Goods index was up 2.30%, Auto was up 2.15%, Bankex was up 1.97%, IT was up 1.69% and FMCG was up 1.60%, while there were no laggards in the BSE sectoral space.

The top gainers on the Sensex were Jaiprakash Associates up 6.16%, Hero Honda up 4.61%, HDFC up 3.62%, HUL up 3.62% and L&T up 3.04%.

On the flip side only Tata Power down 0.44% and Sterlite Industries down by 0.35% were the losers on the index.

Meanwhile, India is looking for alternative banks through which it can channelize payments for the crude oil bought by state owned and other oil companies in the country after Germany pressing its bank to not rout the Indian payment under the US pressure. It is not however clear as yet if the Europisch-Iranische Handelsbank (EIH) bank has already stopped routing payments.  It was the Iran who first proposed a temporary payment channel through a euro account at EIH Bank.  After initial hesitation, the Indian authorities agreed to rout the payments through this EIH. But, the bank is unlikely to continue routing the payments for long as German government has been pressing it to disengage from the Iran oil trade.

However, despite the problems, both the countries seem all set to continue the oil trade. "There is no legal problem regarding oil trade with India. Even the illegal sanctions of the United Nations Security Council do not include Iran's trade transactions of oil and gas,' Iranian Foreign Ministry Spokesman Ramin Mehmanparast said on Tuesday. "Determining how to receive oil and gas payments requires technical calculation and an agreement on the part of the two countries. An ambiguity had briefly emerged, but the issue was resolved once specialist meetings were held," he added.

Both India and Iran had shown strong commitment to continue the trade despite US sanctions. India is second largest crude buyer for Iran and similarly Iran is the second largest crude seller to India following the Saudi Arabia. In fact, Tehran was even ready to take rupees as payment and pay Indian exports in its currency but this would not be sustainable as the trade between the two countries is heavily weighed in favour of Iran. While India imports nearly $9 billion worth of crude oil from Iran, its exports to the oil rich country including rice, tea and machinery etc and are worth around just $2 billion.

Iran had even been supplying crude on credit when the payments were not being made. The two countries are likely to shift to a Middle East based bank for routing payments. Under the plan being discussed now, both - the Indian oil companies and the state-run National Iranian Oil Co will open an account in either a UAE or Turkey based bank and the money will be transferred by the State Bank of India (SBI) to such a bank into accounts of Indian oil companies, which in turn will be transferred to the account of National Iranian Oil Co. 

The S&P CNX Nifty accumulated 102.05 points or 1.76% at 5,887.75. The index touched high and low of 5,892.55 and 5,735.55, respectively.

The top gainers on the Nifty were JP Associates up 6.32%, Hero Honda up 4.74%, Siemens up 4.68%, IDFC up 3.75% and HDFC up 3.69%.

On the other hand, Sun Pharma down 0.75%, Tata Power down 0.61%, Cairn down 0.51% and Sterlite down 0.37% were the only losers on the index.

On the global front, Shanghai Composite was up 0.95%, Hang Seng was up 0.66%, KLSE Composite was up 0.63%, Jakarta Composite was up 0.41%, Nikkei 225 was up 0.90%, Straits Times was up 1.09%, Seoul Composite was up 1.56% and Taiwan Weighted was up 0.55%.

The European markets are trading on a optimistic note as the France's CAC 40 added 0.37%, Germany's DAX climbed 0.61% and Britain's FTSE 100 advanced 0.69%.

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