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Markets trim losses after a sharply lower start

By Reuters

  • 01 Jul 2022
Markets trim losses after a sharply lower start
Credit: Reuters

Gains in consumer goods and financial stocks helped India's blue-chip share indices recover sharply on Friday, after government export duties on oil products triggered a plunge in energy majors Reliance Industries and ONGC.

Nifty ended 0.18% lower at 15,752.05 on the first trading day of the second quarter and Sensex slipped 0.21% to 52,907.93, after falling up to 1.7% each earlier in the session.

The indices, which on Thursday capped their worst quarter since the early days of the COVID-19 pandemic, managed to close the week marginally higher after last-hour buying in FMCG and financial stocks.

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India introduced export duties for gasoil, gasoline and jet fuel to help maintain domestic supplies, and imposed a windfall tax on oil producers that have benefited from higher global crude oil prices, sending energy stocks into a spiral.

The measures "highlight the tightening energy market outlook," Morgan Stanley wrote in a note, adding the announcement was incrementally negative for sector valuations.

Morgan Stanley said ONGC would be most negatively impacted, while Reliance could manage the changes better.

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Reliance, India's most valuable company, shed around $16 billion in market value as its stock plunged 7.2%, marking its worst day since November 2020.

The Nifty Energy index fell 3.9%.

State-owned oil producer ONGC plummeted 13.5% - its biggest slide since pandemic-wrecked March 23, 2020. Oil India slid 15%, while Mangalore Refinery and Petrochemical slumped 10%.

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Meanwhile, the Nifty FMCG index jumped 2.8% on its best day since mid-March, helped in part by a slump in palm oil prices.

Non-bank lenders Bajaj Finance and Bajaj Finserv climbed 4% and 3.6%, respectively, leading the recovery in the Nifty.

The rupee hit a record closing low of 79.05 against the dollar, versus Thursday's close of 78.97.

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