Oil exploration stocks gain

Key benchmark indices were trading with small gains in mid-afternoon trade. At 14:20 IST, the barometer index, the S&P BSE Sensex was up 55.41 points or 0.18% at 31,277.03. The Nifty 50 index was up 22.10 points or 0.23% at 9,637.10. Gains in index heavyweight Reliance Industries supported indices with lower global stocks keeping gains under check.

After opening with moderate gains, key indices hovered near the flat line with a positive bias till morning trade. Indices slipped into the negative terrain and hovered between gains and losses till early afternoon trade. Key indices regained positive zone in afternoon trade.

The S&P BSE Mid-Cap index was unchanged. The S&P BSE Small-Cap index rose 0.17%. Both these indices underperformed the Sensex.

The breadth, indicating overall health of the market is positive. On BSE, 1,307 shares rose and 1,244 shares fell. A total of 145 shares were unchanged.

Shares of oil exploration firms rose after recent rise in crude oil prices. Reliance Industries (RIL) (up 1.89%), ONGC (up 0.94%), and Oil India (up 1.88%) gained. Higher crude oil prices would result in higher realizations from crude sales for oil exploration firms.

PSU OMCs declined after the recent rise in crude oil prices. HPCL (down 0.79%) and IOCL (down 0.26%) declined. BPCL rose 1.46%.

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.

Airline stocks dropped on recent gains in crude oil prices. Jet Airways (down 1.15%) and SpiceJet (down 0.66%) declined. Interglobe Aviation rose 1.02%.

Jet fuel or aviation turbine fuel (ATF) typically makes up almost half of an airline's operating cost. Prices of jet fuel are directly linked to crude oil prices. State-run oil marketing companies revise jet fuel prices on the last day of every month based on the average international crude price.

Oil prices retreated, halting a run of eight straight days of gains on signs that a persistent rise in US crude production is running out of steam. In global commodities markets, Brent for September settlement was off 23 cents at $49.45 a barrel. The contract had gained 91 cents to settle at $49.68 a barrel during previous trading session.

Overseas, European stocks were trading lower, taking their lead from a lacklustre showing in Asia. Asian stocks declined after North Korea launched a missile. North Korea reportedly said it successfully test-launched an intercontinental ballistic missile, claiming a major advance in its attempt to threaten the US with a nuclear-tipped weapon.

Most US stocks rose yesterday, 3 July 2017 as banks continued to climb along with interest rates, and energy companies rallied again with oil prices. Better-than-expected auto sales and a strong report on US factories also boosted stocks.

On macro economic data front, American manufacturers are growing at the fastest pace in almost three years. The Institute for Supply Management said its manufacturing index rose to 57.8% in June from 54.9%. That's the highest reading since mid-2014.

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