Record High ATF Prices, Tata Communications' Tie-Up with Formula 1, and Buzzing Stocks Today

Thu, 17 Mar Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices followed global peers' footsteps and sharply recouped previous session's losses as global investors pinned hopes on Russia-Ukraine talks for de-escalation of the war amid easing of crude oil prices.

At the closing bell yesterday, the BSE Sensex stood higher by 1,040 points (up 1.9%).

Meanwhile, the NSE Nifty closed higher by 312 points (up 1.9%).

UltraTech Cement and Axis Bank were among the top gainers.

Cipla and Sun Pharma, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.8% and 1.5%, respectively.

Sectoral indices ended on a mixed note with stocks in the realty sector, metal sector and oil & gas sector witnessing buying interest.

Shares of Bharat Dynamics and JK Paper hit their respective 52-week highs.

US stock futures are trading on a strong note today with the Dow Futures trading up by 360 points.

The rupee is trading at 76.26 against the US$.

Gold prices for the latest contract on MCX were trading down by 0.2% at Rs 51,463 per 10 grams at the time of closing stock market hours yesterday.

Here are 4 Factors why Indian Markets Rallied Yesterday

Crude oil prices cool-off: Crude oil prices on Tuesday settled below the US$100 per barrel mark for the first time since 1 March as fresh lockdowns in China's manufacturing hubs on account of a new covid-19 wave signaled at possible reduction in petroleum demand in China.

Brent Crude was 1% higher this morning at US$101 a barrel level, but still down 27% from its recently hit 14-year high of US$139.

The easing of prices is not limited to oil, but several commodities including metals and gold have also come off their record high levels.

Moreover, Russian Foreign Minister Sergei Lavrov's statement on Tuesday that negotiations on reviving the Iran nuclear deal were nearing an end also lifted sentiments.

Positive global trend: Asian stock markets saw a much-needed bounce yesterday as Hong Kong's tech giants led a rally in the city after their recent rout.

Yesterday, the Hang Seng and the Shanghai Composite ended up by 9.1% and 3.5%, respectively. The Nikkei ended up by 1.6%.

The bulk of the gains also came after a Chinese state media report signaled support for Chinese stocks.

The US and Chinese regulators are progressing towards a cooperation plan on the US-listed Chinese stocks, the report said, citing a financial stability meeting on Wednesday chaired by Vice-Premier Liu He.

Federal reserve meeting: Globally investors are also waiting for the interest rate decision by Federal Reserve that will be announced on Wednesday night.

Most experts hope to that the Fed will announce a 25-bps hike in interest rates - the first since 2018 - against earlier expectations of 50 bps hike in rates, which seems to have discounted by the market.

The reason for lowering expectations is largely due to the ongoing Ukraine-Russia war and sanctions imposed on Russia by western world.

All eyes are the commentary by Jerome Powell about further rate hikes as inflation hit fresh 40-year high of 7.9% in February.

Sectoral gains: All sectoral indices participated in the run with metal being the largest gainer rising nearly 3% against 4% correction in previous session.

Bank, Auto, and Financial Services rose 1.8% each, while IT and FMCG were up around a percent each.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Tata Communication.

Tata Communications rose 5% on the BSE after the company announced a multi-year strategic collaboration with Formula 1.

Under the collaboration, Tata Communications will function as the official broadcast connectivity provider of Formula 1.

Following the introduction of Formula 1's remote broadcast operations in 2020, Tata Communications has allowed reduction in the organisation's travelling freight by 34%.

Formula 1 racing began in 1950 and is the world's most prestigious motor racing competition, as well as the world's most popular annual sporting series.

Aviation stocks will also be in focus today.

Oil marketing companies on Wednesday sharply raised prices of aviation turbine fuel (ATF) to record high of over Rs 1 lakh per kilolitre (kl).

In a first, ATF prices were hiked by a steep 18.3% to Rs 1,10,666.3 per kl in the national capital. In Kolkata, Mumbai and Chennai, jet fuel is priced at Rs 1.14 lakh, Rs 1.09 lakh, and Rs 1.14 lakh per kiloliter, respectively. Prices are revised every fortnight.

Jet fuel prices comprise 30-40% of the cost of running an airline in India and an increase in prices will hurt profit margins of airlines which have reported huge losses over the last few quarters due to the coronavirus pandemic.

The steep increase in jet fuel prices comes in the backdrop of a surge in global crude oil prices.

Prices, however, have declined from the 7 March high US$139.13 per barrel, the highest since 2008.

Hopes of easing tensions between Russia and Ukraine have calmed the global oil market. Ukrainian president Volodymyr Zelensky early on Wednesday said while positions of Kyiv and Russia at peace talks sound more realistic, time is still required.

Also, a fresh surge in covid-19 cases and ensuing restrictions in China have raised demand concerns, weighing on crude prices.

Jet fuel prices have been hiked six times this year. Unlike ATF, petrol and diesel prices continue to remain steady for over four months now, despite increasing under-recoveries for oil market companies.

On Monday, minister of state for petroleum and natural Gas, Rameswar Teli said that the Union government was ready to take appropriate actions to mitigate the volatility and the impact of high oil prices. He said the government was monitoring global energy markets as well as potential supply disruptions as a fallout of the evolving geopolitical situation.

Torrent Power Inks Pacts to Acquire 51% Stake in Power Distribution Utility

Torrent Power has inked agreements to acquire 51% equity of Dadra and Nagar Haveli and Daman and Diu Power Distribution Corporation.

According to the statement, the SPV will be responsible for the distribution and retail supply of electricity and holds distribution licence in the Union Territory of Dadra and Nagar Haveli and Daman and Diu (DNH & DD).

This acquisition will significantly strengthen Torrent's position as the leading power distribution company in the country with a presence in 12 cities spread across 3 states and 1 union territory.

With the addition of DNH & DD, Torrent will distribute nearly 24 billion units of electricity per annum to over 3.85 million customers and cater to a peak demand of over 5,000 MW.

Future Retail Says will Act to Reverse Store Takeovers by Reliance

India's Future Retail said on Wednesday it was committed to taking back its stores which were seized by rival Reliance, saying it had been surprised by the move.

Reliance, India's biggest retailer, stunned Future on 25 February with its staff suddenly showing up at many of Future's biggest stores to assume control, in what was seen as a de facto takeover.

The takeover occurred even though Future's sparring partner, Amazon.com Inc, says it had legal injunctions in place prohibiting such store transfers.

Reuters has reported that many in Future's management were in the dark about Reliance's plans.

In a statement to Indian stock exchanges on Wednesday, Future said it was committed to take all action to seek 'reversal of takeover of the stores' by Reliance.

Future did not elaborate how it would do so, but said it was surprised by the 'drastic and unilateral action' taken by Reliance.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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