Selling dollars to oil companies helped Sensex jump 405 points
The rupee rebounded on Thursday from a record low as the Reserve Bank of India’s action to sell dollars to oil companies provided relief for the currency. This also helped stock indices, which suffered severe losses in the last few days, rebound.
The central bank’s move has sent out positive signals to the markets, which were grappling under an onslaught of speculation.
The rupee rose as high as 66.85 per dollar shortly after the open, up sharply from a record low of 68.85 per dollar on Wednesday when the currency posted its biggest single-day percentage fall since October 1995.
Thursday’s rupee bounce also boosted shares and bonds, underscoring how movements in domestic markets are increasingly being driven by the beleaguered currency. While the 30-share Sensex gained more than 400 points, the rupee gained 3.46 per cent to close at 66.55/56 a dollar. The rupee had closed at 68.80/81 on Wednesday.
“The rupee has seen some recovery today. Part of this comes from the RBI stepping in to handle the dollar requirements of refiners instead of dealing with it in the spot market.
The Finance Minister has outlined some action to reduce gold, silver and oil imports. There is also global concern that the U.S. Federal Reserve’s quantitative easing (QE) tapering may not happen as expected with the chance of military action against Syria,” said Shrinivas Viswanath, Co-Founder, RKSV, a leading broking firm.
The Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) rebounded by 404.89 points to close at 18401.04.
On the National Stock Exchange (NSE), the 50-share Nifty closed at 5409.05, with a gain of 124.05 points.
“In extension to Wednesday’s later half rebound, the Nifty gradually scaled towards 5400 mark on expiry of August month F&O contracts and gained above two percent,” said Jayant Manglik, President - Retail Distribution, Religare Securities Limited.
All sectoral indices ended in the positive territory, with oil & gas sector leading the rally with a gain of 2.86 per cent followed by metal (2.38 per cent), fast moving consumer goods (2.29 per cent), capital goods (2.20 per cent) and automobile (2.10 per cent).
On BSE, its mid cap stocks gained by 1.47 per cent and small cap 0.69 per cent. “The best part of this rebound was the participation from almost all sectoral indices,” said Mr. Manglik. Though it’s too early to term it as a reversal, noticeable divergence between the price chart and oscillators are indicating strong possibility of significant bounce in the benchmark index.
Importantly, said Mr. Manglik, “Nifty should sustain above 5300 level on weekly closing basis and a failure of the same can result in fresh selling pressure ahead.”