The positive impact of Raghuram Rajan continued on Friday. The stock markets extended gains for the third consecutive session in a row, while rupee carried on the recovery path and closed near its two week high. With equity and forex markets rising, gold continued falling in most of the cities.
Sensex again surpassed the 19,000 mark while Nifty managed to close above 5,600 levels. The BSE index rose by 290.30 points to 19,270.06, while the broader index, Nifty also surged by 87.45 points and ended to 5,680.40. Sensex closed above the critical 19,000 level for the first time in three weeks.
Market rally was lead by bank index, which closed after rising 2.89 per cent. In the just two trading sessions, bank index has recovered by over 12 per cent. Apart from banking shares, buying was seen in capital good and oil & gas indices which rose by 2.77 per cent and 2.2 per cent respectively. Experts said that foreign institutional investors (FIIs) were again buying after many days of continuous selling. Experts further added that a large portion of FII buying was coming in oil & gas and capital good shares. As per provisional data by NSE, FIIs invested Rs 800.71 crore in the equity markets on Friday.
As regards the domestic currency, it was another good day as rupee recovered back to its two week high. Rupee appreciated by 77 paise and finally closed at Rs 65.24 per dollar. Currency experts cited that the recovery in currency primarily came after the Government expanded its currency swap with Japan from $ 15 billion to $ 50 billion to support and stabalise the global financial markets.
Experts further added, currency was also supported by an increase in capital inflows along and dollar selling by exporters. In the last three trading sessions, since Rajan has taken over as the new Governor, rupee has appreciated by 239 paise or 3.53 per cent.
Another ray of hope came from the G- 20 summit where the Brazil, Russia, India, China and South Africa (BRICS) nations decided to launch a $ 100 billion currency reserve fund to support their respective economies while US Federal Reserve takes back its stimulus.
Abhishek Goenka, CEO of India Forex Advisors said, “One important step for the rupee was taken at the G-20 summit where India and Japan have extended their existing currency swap facility. This will enable our country to defend the exchange rate.”