A crude cheer: Sensex up 308 points on easing oil prices
Crude oil prices that acted as a dampener for market sentiments over the last few months, brought cheer to the markets on Friday. HT reports. India bucks the trendUpdated: May 07, 2011 01:41 IST
Crude oil prices that acted as a dampener for market sentiments over the last few months, brought cheer to the markets on Friday. The Sensex at the Bombay Stock Exchange broke out of its six trading session long losing streak and rose by 308 points, or 1.7%, as benchmark Brent crude shed almost $13 per barrel between Thursday and Friday.
The broader Nifty at the national Stock Exchange rose 91.6 points to close at 5,551.5.
Earlier, the unrest across West Asia and North Africa spurred investors to pile on oil and there was significant leveraging in the futures market. It drove Brent to a 2-1/2 year high of $127 last month. However, with dollar strengthening and a weak US economic data led to a $10 per barrel fall on Thursday which was the second biggest in a day. Even on Friday brent crude shed just over $5 in the early hours of trade but recovered as the dollar dropped, trading around $2 lower at $108.8 a barrel."It is a very positive development for an economy, which is so dependent on crude oil import," said Sandesh Kirkire, CEO, Kotak Mahindra Mutual Fund. "Global commodity prices have been driving inflation and input cost which impact the corporate profitability."
One of the factors that led to the fall in oil prices were the fears over global economic recovery that pushed investors to unwind commodities positions as a slow economic recovery will weaken the demand for oil. The scale of Thursday's fall also left many analysts scrambling for an explanation in the absence of any single factor that appeared to have triggered the sell-off. Experts say that a correction was long due.
"The demand for crude went up marginally but the prices had risen significantly," said Kirkire.