Date:17/03/2004 URL: http://www.thehindubusinessline.com/2004/03/17/stories/2004031702431300.htm

Back Crude prices add to the cap

After the successful completion of the public offer of ONGC and the final pricing, the stock of the oil major gained sharply on Tuesday as other blue-chips stock fell.

Dealers said the rise in the stock price had nothing to do with the public offer, but upgrading the price target of the stock by a leading foreign broking firm due to the higher crude prices. This firm has also upgraded net profit of the company by 15 per cent to Rs 13,550 crore for 2004-05. The revision in profit is due to the higher crude prices. Another factor for the upside in the company's profitability is the possibility that ONGC could be permitted to sell crude on a best price basis and in this case this would result in a $1 per barrel higher realisation for its premium Western offshore crude. Further, ONGC Videsh (OVL) is bidding for Shell's 50 per cent stake in their oilfield in Angola and if successful could add more than 7 mtpa of oil as OVL's share. All these factors led to sharp rise in the stock price of the company. On the BSE, the stock gained 5.84 per cent at Rs 834 with volume of 15.30 lakh shares and on the NSE it closed at Rs 830.75, up 5.32 per cent, with volume of 36.85 lakh shares.

Bonus talk boosts it

After continuous fall in the last few days on concern over entry of Honda Motors in two-wheeler market, the stock of Hero Honda gained on Tuesday.

However, the rise in the stock price was not due to fresh development on Honda Motors plans, but due to the market talk of bonus issue by the company. This talk gained momentum as the day progressed, as there was heavy selling in another two-wheeler counter Bajaj Auto as the stock was down by 3.53 per cent at Rs 812.75 on the BSE. The talk is that Hero Honda has huge cash reserves and the company may reward its shareholders with a liberal bonus issue. This led to active buying in the shares of the company on Tuesday. The stock gained 6.58 per cent at Rs 479.70 on the BSE with volume of 14.50 lakh shares and on the NSE it closed at Rs 478.35, up 6.24 per cent with volume of 31.72 lakh shares.

Virendra Verma