Sensex snaps two days of losses as oil companies gain

By Indulal PM

MUMBAI (Reuters) - The BSE Sensex snapped two days of falls and ended up on Tuesday, recovering from a 1-1/2-week low hit on Monday, buoyed by gains in upstream oil and gas companies on expectations of margin expansion after a surge in international oil prices.

Brent crude futures held near $113 per barrel on Tuesday as concerns over oil supply persisted, with the United States considering air strikes in Iraq amid a worsening security situation in the key oil producing country.

Gains were led by oil explorers such as Oil and Natural Gas Corp , Reliance Industries Ltd and Oil India Ltd .

 

State-run oil marketing companies such as Indian Oil Corp , Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd also rose.

The market traded cautiously, amid a volatile trading session, tracking weak regional peers as the deepening conflict in Iraq and a gas dispute between Ukraine and Russia sapped investors' appetite for riskier assets.

"We have seen a minor correction, and it's giving an entry point to people who were not part of the earlier rally. Markets are likely to trade range-bound till the budget and we may see some portfolio shuffling," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.

"It's still a buy-on-dip market and the outlook is positive," he said.

The benchmark BSE Sensex gained 1.31 percent to 25,521.19, its biggest single-day gain since June 6.

The broader Nifty closed up 1.3 percent at 7,631.70, also marking its biggest single-day gain since June 6.

Shares in ONGC closed 4.3 percent higher on the back of increasing global oil prices. Other explorers such as Oil India gained 1 percent, while Reliance Industries closed 2.3 percent higher.

Gail (India) Ltd closed 2.7 percent higher.

Banking stocks gained, with State Bank of India ending 2.8 percent higher and ICICI Bank gaining 2.51 percent. The Bank Nifty closed 2.3 percent higher.

Among other blue-chip stocks, Larsen and Toubro rose 2.06 percent after falling 2.1 percent in the previous session. Bharat Heavy Electricals Ltd ended 2.8 percent higher. The capital goods index of the BSE gained 1.93 percent.

Shares in export-oriented companies also gained after the rupee slumped to a near two-month low earlier in the day.

Tata Consultancy Services Ltd closed 0.4 percent higher, while HCL Technologies ended up 2.25 percent.

However, auto stocks fell. Mahindra and Mahindra Ltd ended 1.42 percent lower and Hero MotoCorp closed down 0.76 percent.

Overseas investors, who were supporting a 21 percent rally in Indian shares so far this year, became net sellers on Monday, selling shares worth 1.94 billion rupees, after three days of buying.

(Editing by Anand Basu)