Oil E&P stocks edge higher as crude rebounds

Volatility continued as key benchmark indices pared gains in mid-morning trade. At 11:19 IST, the barometer index, the S&P BSE Sensex, was up 130.68 points or 0.53% at 24,566.34. The 50-unit Nifty 50 index was currently up 37.25 points or 0.5% at 7,459.70. Gains in global stocks aided the upmove on the domestic bourses.

The broad market depicted strength. There were almost four gainers against every loser on BSE. 1,720 shares gained and 431 shares fell. The BSE Mid-Cap index was currently up 0.93%. The BSE Small-Cap index was currently up 1.43%. Both these indices outperformed the Sensex.

The Sensex hit its highest level in more than a week when it jumped 214.91 points or 0.87% at the day's high of 24,650.57 in early trade. The barometer index rose 85.93 points or 0.35% at the day's low of 24,521.59 in early trade. The Nifty also hit its highest level in more than a week when it rose 64.70 points or 0.87% at the day's high of 7,487.15 in early trade. The index rose 25.40 points or 0.34% at the day's low of 7,447.85 in early trade.

In overseas stock markets, Asian shares edged higher on speculation that the Japan's central bank will introduce new monetary stimulus at its meeting later this week, on 28-29 January 2016. US stocks rose on Friday, 22 January 2016, as oil futures surged and investors were encouraged by hints of potential central-bank stimulus in Europe and Japan. At a news conference after the conclusion of European Central Bank's (ECB) regular policy review, ECB President Mario Draghi signalled last week that the ECB governing council may provide more stimulus at its next meeting in March, noting that the outlook for inflation had weakened significantly.

IT stocks advanced. Tech Mahindra (up 0.92%), HCL Technologies (up 1.58%), TCS (up 1.17%) and Infosys (up 0.37%) edged higher. Wipro fell 0.58%.

Shares of oil exploration and production stocks rose after a rebound in crude oil prices. Reliance Industries (RIL) (up 0.98%), Oil India (up 0.85%) and ONGC (up 1.36%) edged higher. Higher crude oil prices would result in higher realization from crude sales for oil exploration firms.

Cairn India shrugged off weak third quarter results. The stock was up 3.32%. The company's consolidated net profit fell 99.35% to Rs 8.69 crore on 44.53% decline in total income to Rs 2230.19 crore in Q3 December 2015 over Q3 December 2014. The weak performance was primarily due to decline in crude prices. The EBITDA (earnings before interest, taxes, depreciation and amortization) margin dropped to 33% in Q3 December 2015 compared with 60% in Q3 December 2014. The result was announced after market hours on Friday, 22 January 2016.

Cairn India said it maintains its view to ramp-up the investment as oil prices improve and costs bottom out. The company aims to have healthy cash flows post capex so as to retain the ability to pay dividends, Cairn India said in a statement.

Shares of state-run oil marketing companies (PSU OMCs) fell after a rebound in crude oil prices. BPCL (down 0.92%), HPCL (down 0.98%) and Indian Oil Corporation (IOCL) (down 2.12%) declined. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.

Brent for March settlement was currently up 40 cents at $32.58 a barrel. The contract had surged $2.93 a barrel or 10.01% to settle at $32.18 a barrel during the previous trading session.

Unichem Laboratories surged 5.54% after net profit spurted 897.1% to Rs 20.54 crore on 15.6% growth in net sales to Rs 303.93 crore in Q3 December 2015 over Q3 December 2014. The result was announced on Saturday, 23 January 2016.

SpiceJet surged 9.67% after the company reported net profit of Rs 238.40 crore in Q3 December 2015 as against net loss of Rs 275.03 crore in Q3 December 2014. The result was announced at the fag end of the trading session on Friday, 22 January 2016. SpiceJet said that it reported its highest quarterly net profit in its history. The company's net sales rose 10.92% to Rs 1439.38 crore in Q3 December 2015 over Q3 December 2014.

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