Stocks rise, but traders cautious ahead of inflation

Stocks opened higher on Friday tracking advances in certain East Asian markets on account of a drop in crude oil. But dealers warned the rise may be short lived as the market awaits inflation data expected around noon.

At 10:05 am, the National Stock Exchange’s Nifty was up 12 points or 0.27 per cent at 4516.60.

The Bombay Stock Exchange’s Sensex was up 70 points or 0.46 per cent at 15,157.12.

Biggest Sensex gainers were ONGC (up 1.93%), BHEL (1.54%), DLF (1.15%), Grasim Industries (1.11%), NTPC (1.09%) and Infosys Technologies (1.07%).

Losers comprised Bharti Airtel (down 0.7%), Reliance Industries (0.29%), Reliance Communications (0.25%) and ITC (0.12%).

Market breadth on BSE showed 501 advances against 188 declines.

“The morning buoyancy will be on account of the $4.75 slide in crude, which in turn was reacting to the decision of China to increase the fuel prices by 17 per cent. The market hopes that the price hike will reduce consumption and may help in cooling crude prices,” said Anagram Stock Broking in a note to clients.

“We believe the move will not reduce consumption, though crude can temporarily face pressure. Secondly, this price hike will add to the inflation woes further and this higher inflation will be exported to other countries by China. The view remains to be on the sidelines and use any rise to lighten commitments,” the brokerage added.

Following China’s decision to hike oil prices in order to curb consumption, the CSI 300 Index shot up 4.86 per cent in China, the Hang Seng was up 1.71 per cent in Hong Kong and the Straits Times added 0.93 per cent in Singapore. The Nikkei 225, however, was down 0.95 per cent in Japan.

Oil slipped further on Friday, after a nearly $5 plunge a day ago, as China's move to raise fuel prices raised concerns that demand in the world's second-largest oil consumer will fall. US July crude, which expires later in the day, fell 66 cents to $131.27 a barrel.

The rupee was trading at 42.96/97 a dollar, from the previous close of 42.97/98.

Inflation data due around noon, is expected to have risen to a 13-year high of 9.82 per cent in the week to June 7, higher than the previous week's 8.75 per cent.

US stocks rose on Thursday as a drop in oil prices fueled investor optimism about consumer spending, driving shares of transportation and retailers sharply higher. The Dow Jones Industrial Average gained 0.28 per cent, the Standards & Poor’s 500 Index added 0.38 per cent and the Nasdaq Composite Index rose 1.33 per cent.