Mumbai: As Brent crude prices fell sharply, Sensex and Nifty hit record highs.
This is the steepest monthly decline in crude prices since November 2008.
Sensex opened to a 380 point jump as its market cap hits Rs. 1 lakh crore in morning trade while 50-share Nifty gained around 120 points.
As the price fell to a four year low, near $72 a barrel Friday, a 12-member cartel OPEC decided to not to cut oil output to support prices.
Barclay’s analysts said OPEC’s decision marked a ‘watershed’ for oil markets.
Around 40% of India’s import bill is accounted by crude oil as India is dependent for 75-80% of its domestic energy requirements on imports.
This fall in crude prices will lead to savings in foreign exchange for India.
India’s fiscal deficit will be narrowed as a result of the falling oil prices as it will lower the government’s subsidy payout towards LPG and kerosene at below-market prices.
Friday’s rally is testimony of big positives India is set to accrue from falling oil prices.
Global brokerage Nomura says every $10 per barrel fall in oil price can boost India’s GDP growth by around 0.1 percentage points, lower consumer inflation by about 0.2 per cent and improve current account balance by 0.5 per cent of GDP.
Oil marketing companies were the big gainers.
State-run BPCL was among the top Nifty gainers, rising around 5%.
Banks also gained on hopes of lower fiscal deficit. ICICI Bank and State Bank of India were among the top Nifty gainers.
Airline stocks also surged on hopes of lower air turbine fuel. Jet Airways jumped as much as 20 per cent, while SpiceJet traded with over 10 per cent gains.
The Sensex hit a record high of 28,822, while the Nifty hit its all-time high of 8,617.
Indian stock markets have gained over 30% year-to-date on account of huge foreign fund flows.
Overseas investors continued their buying spree for the sixth straight session. They bought shares worth Rs 390 crore on Thursday.
The market capitaliastion of all listed companies on the Bombay Stock Exchange, Asia’s oldest stock exchange, hit a record Rs 100 trillion (lakh crore) mark in morning trade on Friday. The landmark came on a day when the Sensex hit a record high above 28,750.