Sensex gains, state-run oil companies shares jump
Sensex regained 20,000 points on Friday after a brief slump with gains seen especially in oil sector companies.
The gain came a day after the government hiked prices in diesel.
Shares in state-run oil companies such as ONGC (Oil and Natural Gas Corporation) surged for a second consecutive session on Friday after the government's diesel price hike was seen reducing their subsidy burden.
The ONGC is up by 10.2 percent, adding about USD 6 billion in market value.
Refiner Hindustan Petroleum Corp Ltd (RHPCL) gained 5.3 percent while Bharat Petroleum Corp Ltd (BPCL) is up at 5.8 percent and Oil India Ltd (OIL) shares jumped by 7.9 percent.
Financial analysts feel that the decision to hike the price of the diesel will prove beneficial for the stock market.
"Now it is expected that every month there might be an escalation in prices of diesel by 45 or 50 paise (0.0083 to 0.0092). Now if the diesel price increases then it can cause problem for the common people. But if it is viewed from the stock market's angle then it is a very good reason for the growth of the market.
"The first reason for this is that various oil marketing companies such as Indian Oil, BPCL, HPCL, they were incurring heavy losses. They were incurring of almost 10 rupees per litre. These losses will be minimised and it the shares of these companies are doing well," said Akash Jindal, a financial analyst in New Delhi.
Jindal added that it is good opportunity for the people to invest in good shares.
"I believe this rally will not stop here. There might be a few corrections in between. But inspite of that, around the budget session, we can cross the level of 21,500. So the investors who have not bought any shares yet should not think that they have missed the bus. Still there is an opportunity for them to buy into good stocks. Still there is lot left in this rally," he said.
The Sensex rise will send a right signal on the UPA Government's decision to address fiscal issues of the country.