Banking stocks, which had displayed strength initially, were battered as the fuel price hike, along with rising inflation, increased fears of rate hikes by the central bank.
The share prices of oil marketing companies rose sharply, and registered one of the highest intra-day gains between 9-14% each.
Reliance Natural Resources moved up over 3% as the Ambani brothers signed a revised gas supply agreement ending the long standing overhang at the counter.
Lastly, as we had forecast, it was also the apprehension of carrying long positions overnight that aggravated the intensity of the sell-off in the final hour of trade.
With the euphoria that has surrounded the fuel price decontrol buzz, it would be interesting to see how the trading sessions pan out next week. For now, traders would do well to avoid contrary positions in oil stocks unless there are any rollback of some of the measures announced or proposed.
Price actions in interest rate sensitives such as banking, real estate and auto needs to be closely monitored as the possibility of policy tightening has increased considerably.
Also, keep a close watch on events taking place over the weekend in the global markets. With Eurozone crisis once again threatening to take centre stage, global markets may once again surrender to the uncertainty. This could have an adverse impact on the equity markets globally.
(The report is powered by www.theipoguru.com)
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