Sensex, Nifty Inch Higher; Rail Infra Stocks Rise

BSE Sensex and Nifty edged higher today but gains capped by concerns over Iraq crisis that has taken oil prices to near 9-month highs. Markets took support from higher Asian markets and a rise in the rupee.

Rail infra stocks Texmaco, Kalindee Rail Nirman and Hind Rectifiers were among the gainers after train fares were hiked by over 14 per cent. These stocks rose nearly 3 per cent. The government is also expected to open up parts of the rail network to foreign investors to boost investment in the sector.

Container Corporation of India also rose nearly 2 per cent as the freight charges were also hiked 6.5 per cent.

Sanjay Sinha, founder of Citrus Advisors, said the rail fare hike is a "positive move. It signals that the government is committed to reduce subsidy. However, the fare and freight hike could have some inflationary impact."

He said that if crude oil prices hold $120 and rupee remains below 62.50, the markets could trade in a range and may hold 7,500.

In today's trade, Brent crude prices were higher near 9-month highs at $115 per barrel while rupee traded at 60.14 to a dollar vs its previous close of 60.18.

Shares of ITC were down over 2 per cent after Health Minister Harsh Vardhan sought a steep uniform hike of Rs 3.5 per cigarette to make their cost prohibitive and discourage consumption. Among the Nifty gainers, ONGC, Hero MotoCorp and BHEL were up between 1.5-2 per cent.

Deven Choksey, MD of KR Choksey Securities, said the Nifty is likely to remain above 7500 on further allocation of capital and support from IT and pharma stocks. The rail fare hike will be taken positively by the markets as it can help lower the fiscal deficit and it also signals the reform process of the government, he added.

Asian stocks rose today as upbeat news from China's factory sector and fresh highs on Wall Street fueled appetite for riskier assets, while crude oil held near nine-month highs as fighting in Iraq intensified.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.7 per cent. Tokyo's Nikkei rose 0.4 per cent, shaking off early weakness.

The June HSBC/Markit Flash China PMI showed China's factory sector activity expanded for the first time in six months, offering new signs the economy is stabilising thanks to Beijing's measures to shore up growth.

At 9:27 a.m., Nifty was up 15 points to 7,525 while Sensex rises 60 points to 25,165. (With Agency Inputs)