Share Market / Stock News and Updates

The Indian stock market ended the first week of the new year on a positive note with both key indices — the Bombay Stock Exchange’s Sensex and the National Stock Exchange’s Nifty 50 — scaling new lifetime highs, propelled by heavyweights Oil & Natural Gas Corp and Reliance Industries, on rising crude prices, coupled with the government’s announcement to hike retail oil prices by this month-end.

Big buying by domestic institutions and Finance Minister P Chidambaram’s plea to bank chiefs to reduce lending rates to maintain economic growth also boosted sentiment, said dealers.

The Sensex was up 341.69 points, or 1.68 per cent, to 20,686.89 while rival National Stock Exchange’s S&P CNX Nifty Index gained 95.75 points, or 1.55 per cent to 6,274.30.

The first week of 2008 saw the Sensex and the Nifty rising 2.38 per cent (479.94 points) and 3.20 per cent (194.60 points), respectively.

Volatility in bank stocks:
Select bank shares may rise next week, while others are likely to be volatile on account of stretched valuations. “The results and Reserve Bank of India’s monetary policy would be the triggers for banking stocks,” said a banking analyst. Banks’ third quarter performance would be boosted by other income. The cut in deposit rates is also likely to help ease the pressure on net interest margin, bankers said. Moreover, lower provisioning on account of the bullish government bonds market will boost the bottom-line.

Though Finance Minister P. Chidambaram today expressed his wish that the lending and deposit rates should be 50 basis points lower, bankers do not expect RBI to cut rates at the third quarter review of its monetary and credit policy for 2007-08 (April-March) on January 29. Some brokerages see room for a rise in the stock prices of state-run banks despite their stretched valuations.

Cement shares may dip:
Most cement shares could trade sideways next week with a negative bias as the Tamil Nadu government asked the cement makers to slash commodity prices to Rs 230-235 per 50 kg bag. Some buying is however seen ahead of the October-December earnings, which are likely to be robust, dealers said. The investors are cautious that the government may intervene if there are any further hikes. But the cement dealers are still expecting at least one hike of Rs 3-5 per 50 kg bag in the western and northern region by February 1.