Recovery in rupee coupled with foreign institutional investors (FII) buying in Indian markets pushed stock markets to close nearly 2 per cent up on Thursday.
Backed by heavy buying from both FIIs and domestic investors, Sensex climbed by 385 points to its one week high and closed at 19,902.07. The broader index, Nifty also surged sharply by 129.65 points before ending near its day high at 5,909.7. As per experts, market got strength as investors were seen buying shares of the beaten down sectors. Apart from that they also gave credit to rupee appreciations as it helped improve the sentiments of foreign investors. In just two trading session, Sensex has jumped by nearly 520 points.
The rally was lead by metal and bank indices which rose by 3.94 per cent and 3.41 per cent respectively. Out of the 13 sector indices on BSE, 12 closed with gains while FMCG index fell by 0.88 per cent. Buying was also seen in capital goods and oil & gas indices which closed with gains above 2.4 per cent.
As per experts, banking stocks rallied on back of Reserve Bank of India’s decision to buy up to Rs 100 billion of bonds via open market operations on October 7. On Sensex out the 30 stocks comprising the index, 28 shares closed in green. On Nifty, 48 shares closed with gains out of the 50 listed stocks.
Commenting on market performance, Equity Trendz’s Kunal Saraogi said, “There was heavy short covering seen in the banking, metal and automobile sectors. Investor sentiment towards the sectors is now changing as the stocks have correct heavily. Also the sharp rise in domestic currency and FII inflows also helped in improving the market situation.”
Rakesh Bansal from RK Global Securities said, “We expect the markets to continue the rally for the coming few sessions. I expect this time markets rally would be broad based. Investors should keep a close watch on cement banking, auto, metal, sugar and information technology shares as they can be the best performing sectors as the markets continue to rise.”
As the stock markets managed to close nearly 3 per cent up, the same tern was seen on the forex markets. Rupee appreciated by 72 paise and closed at Rs 61.73 per dollar. Currency gained the most in two weeks as it breached the Rs 62 per dollar mark for the first time after August 16, 2013 when it closed at Rs 61.65 per dollar.
Rupee gained on back of heavy buying by foreign investors in the Indian stock markets. As per the data provided by the stock exchanges, FIIs bought shares worth Rs 997.21 crore during the Thursday’s session. Forex experts said that currency also rose as the dollar fell to its 8 month low against other major currencies on expectations that the Fed tapering would be delayed due to the budget impasse there. They further added that exporters also were seen selling the greenback.
Abhishek Goenka, CEO of India Forex Advisors said, “The gains were mainly attributed to the sharp weakness in the US dollar index and strength in the euro. The US dollar weakened globally following a failure by US lawmakers to resolve a budget impasse.”