Cooling off oil drives Sensex 265 points up

Indian equities showed a spectacular performance on the first day of a week by recovering losses seen in previous two sessions, after a fall in crude oil prices in the international markets on the back of likely destruction in demand in Japan and easing out tensions in Middle East & North Africa for the time being.

Buying across the sectors in the second half of trade pushed the benchmark Nifty above the 5500 mark to close at 5,531.50, surged 86.05 points or 1.58%. Oil & Gas, Metal, Bank, Information Technology and Power were the leading indices with 1-2% upside.

Crude oil prices witnessed sell-off on the back of likely destruction in demand in Japan after a massive 8.9 magnitude earthquake and 10-metre tsunami on Friday. Ports, power plants and refineries were shut in the country.

Japan has been battling hard to prevent a nuclear catastrophe and carry on rescue operations for millions of people without power or water in its worst crisis since World War II.  A quake and tsunami are estimated to have killed more than 10,000 people and left more than 1 million without water or power. Japan's central bank doubled its asset buying scheme to 10 trillion yen and supplied record funds to banks on Monday to shore up confidence in the economy.

"Short-term oil prices will decline because Japan is one of the world's largest oil importers and the Japanese economy will be severely and negatively impacted," said Andrew Moorfield, head of oil and gas division at Lloyds banking group.

Nymex crude oil was trading at USD 99.11 a barrel, down 2.03% and the London Brent crude fell by USD 2% to USD 111.56 a barrel today. However, he said, "Long term oil prices will rise as the Japanese economy recovers and emerging market demand continues to grow."