Stock indices closed at all time highs on Wednesday as foreign institutional investors (FIIs) continued their purchases, while the rupee strengthened to an eight-month high against the U.S. dollar at the inter-bank foreign exchange market.
The S&P BSE Sensex closed at 22095.30 with a gain of 40.09 points. Metal stocks which gained 2.70 per cent followed by capital goods 1.35 per cent, oil & gas 1.14 per cent, auto 0.95 per cent and banks 0.62 per cent, helped the index rise.
However, healthcare stocks lost 1.82 per cent followed by consumer durables (1.37 per cent), IT (0.90 per cent), tech (0.70 per cent), FMCG (0.68 per cent), realty (0.24 per cent) and power (0.19 per cent). On the National Stock Exchange (NSE), the 50-share Nifty was up by 11.65 points at 6601.40.
“The rest of the week should see heavy volatility as the markets eagerly await the Reserve Bank of India’s announcement on the repo rate (interest rates) on April 1. With the Ukraine crisis causing Russia’s stock markets to plummet, FIIs continue to look to India as the preferred emerging market to invest in. This trend should continue for the foreseeable future,” said Raghu Kumar, co-founder, RKSV, a leading broking firm.
Meanwhile, the rupee gained against the U.S. dollar to close at 60.15 after hitting an intra-day high of 60.04, its strongest close since July 30, 2013.
“Indian rupee touched its eight month’s high posting gains of close to 3 per cent in March alone, on the back of persistent capital inflows into the equity and debt markets,” said Sugandha Sachdeva, Assistant Vice-President & Incharge-Currency Research, Religare Securities Limited.
Total FII flows in to equities stand at $2.6 billion while inflows into the debt market are to the tune of $5.9 billion so far this year. She said that the rupee’s fortunes changed after the RBI Governor Raghuram Rajan took several measures to stem the record depreciation of the currency. This has resulted in rupee rebounding by around 13 per cent from its all-time low of 68.93 (spot) witnessed in August 2013.
The rupee has witnessed a dramatic turnaround from being the worst performer among emerging market currencies to be the best performer in a matter of few months only. Along with strong fund inflows, positive set of economic data in the current environment, the shrinking current account deficit as well as easing inflation has helped the rupee to perk up, said Ms. Sachdeva, adding, “the domestic unit looks all poised to strengthen further up to 59 mark against the dollar in the near-term, as foreign investors continue to pump in dollars to buy stocks and bonds, pinning hopes on the formation of a stable government after the forthcoming general elections.”
