Rupee back at 54-level as fund flows strengthen
Mumbai: Strengthening for the third day in a row, the rupee Thursday shot up by 42 paise against the dollar to end at 54-level for the first time in nearly three weeks, amid sustained FII inflows and a surprise rate cut by China.
The rupee commenced higher at 55.14 a dollar from the overnight close of 55.36 at the Interbank Foreign Exchange (Forex) market, and immediately touched a low of 55.30 on some dollar demand from oil importers as crude oil hovered around the USD 85 per barrel.
However, the currency bounced back to breach 55-mark to a high of 54.92 before concluding at 54.94, its highest closing since May 18. This was rise of 0.76 percent or 42 paise.
In the last three sessions, the rupee has gained 71 paise at a time local stocks, represented by Sensex, rose over 600 points with the 30-share index rising by 195 points today.
Apart from Foreign Institutional Investors (FIIs) buying shares worth over Rs 675 crore today, forex dealers said the rate cut in China in late trade further boosted a revival in global risk-taking sentiment.
The euro hit a 10-day high of USD 1.2601 against the dollar and the Australian dollar rose to new three-week high of USD 0.9993 after China's central bank unexpectedly cut benchmark one-year lending rate by 25 bps to 6.31 percent. The deposit rate was also lowered by 25 bps to 3.25 percent.
The rate cut by China helped the rupee, said Hemal Doshi, Chief Currency Strategist, Geojit Comtrade.
"Factors like euro strengthening against dollar and FIIs buying shares have contributed to the appreciation of rupee," said T S Srinivasan, GM (Treasury), Indian Overseas Bank.
Expectations of more easing from Federal Reserve weakened the dollar as it down 0.3 percent against a basket of currencies.
Rupee back at 54-level as fund flows strengthen
Sensex up for 4th straight day, ends at 1-month high of 16,649
Mumbai: Indian stocks rose for the fourth straight day Thursday with Sensex climbing 195 points to a one-month high of 16,649.05 as investors cheered government push to the infrastructure sector and the rising rupee.
After gaining nearly 500 points in the last three days, the 30-share index opened with a 100-point gain on strong Asian cues. It consolidated gains further as the rupee clawed back to 54-levels intra-day.
The sentiments were supported as European markets opened higher on hopes that global central banks will resort to a fresh round of stimulus as the Eurozone crisis deepens.
All eyes are on Federal Reserve chief Ben Bernanke who is scheduled to speak to US Congress later today and investors expect to hear about quantitative easing, said traders.
Gains in Sensex were led by banks including HDFC Bank, and ICICI Bank up over 3.5 percent as the belief gained further ground that Reserve Bank will cut rates on June 18.
Index heavyweight RIL closed 1 percent up on its 30th AGM while Infosys and ITC ended 1-2 percent higher. Auto counters including Maruti, M&M and Hero also rose 2-3 percent today.
Factors like crude oil prices at USD 85 a barrel and rupee trading near 55-level to a dollar enthused investors further to buy as across the market over 1,500 stocks rose with investor wealth surging Rs 42,000 crore to Rs 59 lakh crore.
With 25 out 30 constituents closing higher, Sensex ended at 16,649.05, a level last seen on May 7, up 194.75 points.
Similarly, the 50-share NSE Nifty regained the key 5,000-level by rising 52.55 points to 5,049.65.
"Markets were inspired by hopes of rate cut and positive sentiments after Manmohan Singh announced a big push to infrastructure. European and Asian shares were up on speculation that central banks will respond with more stimulus," said Sharmila Joshi of Fairwealth Securities.
The government had yesterday announced 2012-13 ambitious targets for investments in ports and aviation sectors, power generation, coal production and railway freight carriage.
Asian stocks jumped, extending gains made in the previous session, as investors hoped for US and European monetary easing to counter growing economic woes.
Key benchmark indices in Hong Kong, Japan, South Korea and Taiwan rose by between 0.34 percent to 2.56 percent while China's Shanghai Composite and Singapore's Straits Times fell by 0.06 percent and 0.71 percent.
European stocks erased some of its early gains but still traded higher in their afternoon deals. Key indices like FTSE was up 0.55 pert cent, CAC (0.34 percent) and DAX (0.29 percent).
Major gainers from the Sensex pack were HDFC Bank (3.75 percent), followed by ICICI Bank (3.67 percent), Sterlite Ind. (3.42 percent), DLF (3.27 percent), Maruti Suzuki (3.03 percent), Infosys (1.99 percent), Hero Motocorp (1.97 percent), M&M (1.89 percent), ITC (1.86 percent), NTPERCENT (1.83 percent), Tata Power (1.75 percent), Jindal Steel (1.52 percent), BHEL (1.3 percent), Bharti Airtel (1.1 percent) and Reliance (0.97 percent).
However, Wipro fell by 1.91 percent, Gail India by 1 percent and TCS by 0.94 percent.
Among the sectoral indices, the BSE-Realty shot up by 2.28 percent followed by the Bankex (2.25 percent), the BSE-Auto (1.39 percent), the BSE-Power (1.20 percent), the BSE-Metal (1.16 percent), the BSE-FMCG (1.15 percent) and the BSE-Capital Goods (1.12 percent).
The market breadth continued to show positive trend as 1,527 shares finished with gains while 1,172 ended with losses.
"A lot of events are lined up in the near term:- IIP: June 12, WPI: June 14, Greece re-election: June 17, RBI policy meeting: June 18 and FOMC meeting: June 20...These events may have significant market implications," said Pankaj Pandey, Head Research, ICICIdirect.
The total turnover firmed up further to Rs 2,176.65 crore from Rs 2,060.29 crore yesterday.
Sensex up for 4th straight day, ends at 1-month high of 16,649
