Sharp rupee appreciation coupled with a huge fall in profit booking by foreign institutional investors (FII) and an improvement in global sentiment helped Indian markets close with substantial gains on Monday. The benchmark Sensex rose by 451.32 points and closed at 20,850.74 along with Nifty, which jumped by 132.85 points to 6,189.
Markets experts said that the Sensex gained the most in November as overseas stocks advanced on China’s proposed economic reforms and expectations that the US stimulus programme would be extended. Strength in domestic currency added more support. Ashok Agarwal from Escorts Securities said, “Markets rallied as FIIs reduced their profit booking and again started buying in Indian equities. Also the positive sentiment created by the hopes of reforms in China helped in improving the overall investor sentiment globally. Going forward, we expect the markets to continue this rally as the global scenario is improving. But investors should not start buying blindly and focus on those stocks which till now have not participated in the rally.”
As Sensex registered its sixth biggest rise in 2013, rupee appreciated by 70 paise to Rs 62.41 per dollar on back of heavy dollar selling by exporters and banks. The domestic currency rose for the third day, aided by increased capital inflows and Reserve Bank of India (RBI) Governor Raghuram Rajan’s comments on Thursday that there is no fundamental reason for the currency to fall again.
Commenting on the rupee movement, Abhishek Goenka, CEO of India Forex Advisors said, “It was yet another strong session for the rupee which was mainly supported by Janet Yellen’s comments, rally in the local stock markets and last week’s optimistic comments by Raghuram Rajan. Yellen continued to be dovish in her stance, which helped the stock markets across the world to rally and helped all the major Asian currencies to post gains.”
The dollar index, a gauge of the US currency against six major global rivals, was down by 0.08 per cent in the wake of weak economic data and dovish testimony by Federal Reserve chief nominee Janet Yellen, which indicated tapering of the stimulus programme may be delayed. As regards global markets, Hang Seng Index of Hong Kong surged 2.73 per cent and the Shanghai Stock Exchange Composite Index rose 2.87 per cent amid a firming trend in Asia after China’s Government said it would carry out broad reforms. France’s CAC gained 0.65 per cent while Germany’s DAX was trading with 0.58 per cent gains. FTSE of UK also registered a jump of 0.39 per cent.
“Profit booking by FIIs has been reduced as they are again investing heavily in equities. Also there has been a ease in the fear of early tapering which worked in our favor as investors were again seen trading,” said Kunal Saraogi of Equity Rush. As per the provision data provided by the stock exchanges, FIIs bought shares worth a net Rs 1,158.57 crore on Monday. Market’s total turnover also rose to Rs 2,037.12 crore from Rs 1,850.06 crore last Thursday as 26 shares out of the 30 stocks comprising Sensex and out of Nifty’s 50 stocks, 47 ended with gains.
All the 13 sectoral indices of BSE ended in positive lead by capital goods and bank indices, both of which rose over 3 per cent. Apart from that, sectors which gained the most included FMCG, real estate, oil & gas and power as they ended the session after rising 2.52 per cent, 2.41 per cent, 2.34 per cent and 1.73 per cent respectively.