The rupee continues to be a problem area for the managers of the economy as it slipped to close at 64.30/31 on Monday compared to its previous close of 63.20/21. During the day, it was trading within a band of 63.65-64.75.
Their problems have been confounded with bond prices falling even as the authorities are readying for sale of debt and treasury bills worth in all about Rs.53,000 crore this week.
The bench-mark 10-year bond yield rose by eight basis points to 8.34 per cent.
The yield, it may be recalled, fell by 62 basis points last week after surging to 9.48 per cent last Tuesday. The swings in bond yields are primarily the result of volatility in the rupee.
Open market operations
The Reserve Bank of India, in the meanwhile, has indicated that it would buy Rs.8,000 crore ($1.24 billion) worth of government bonds through open market operations on August 30. When it resorted to open market operations to buy bonds last week, the central bank sought to send out signals that it was keen on reducing the long-term interest rates.
Rating agency Fitch’s warning on sovereign ratings also weighed on the rupee. “Over the near-term, the rupee is likely to move in a range of 63.50-65, with demand for dollar remaining strong at lower levels,” said Anindya Banerjee, Currency Analyst, Kotak Securities.
In the offshore non-deliverable forward (NDF) market, the one-month forwards were quoted at 65.02 a dollar.
The S&P BSE Sensex closed at 18558.13 with a gain of 38.69 points with power stocks gaining 1.56 per cent, followed by capital goods (1.25 per cent), healthcare (1.12 per cent) and metal (1.05 per cent).
However, bank stocks were the worst hit with a fall of 1.04 per cent. Other sectoral stocks which ended in the negative territory include oil & gas (0.43 per cent), PSUs (0.18 per cent) and consumer durables (0.05 per cent).
Among broad based indices, BSE 100 gained 0.23 per cent, BSE 200 by 0.28 per cent and BSE 500 by 0.29 per cent.
On the National Stock Exchange (NSE), the 50-share Nifty closed at 5476.50 with a marginal gain of 4.75 points.
Markets opened positively tracking global cues. The U.S. markets on Friday ended with a positive note on the hope that weak home sales data might force the U.S. Federal Reserve to start trimming its stimulus plan from next month and Asian markets were following the U.S. markets.
“But in the trading hours, some sort of profit-booking was seen which made the markets wipe out its gains and after that swung throughout the day in between gain and losses,” said Alex Mathews, Head Research, Geojit BNP Paribas Financial Services Ltd.
The Sensex closed with a gain of 39 points