The hope of a diesel price hike and the Raghram Rajan effect gave an impetus to stock markets as the S&P BSE Sensex closed above 19000-mark, and the rupee, too, ended higher against the U.S. dollar in a highly volatile trade in the foreign exchange market on Friday.
The rupee moved up to close at 65.24 a dollar compared to its previous close of 66.01 on Thursday. In a volatile trade at the foreign exchange market, the rupee opened at 65.92, and moved down to 66.31 before closing at 65.24. It touched an intra-day high of 65 a dollar.
“Indian rupee posted a dramatic come back and gained by a per cent after three consecutive weekly losses. Rupee was propelled higher by the optimism drive which was fuelled after Raghuram Rajan took charge as the Governor of RBI and announced a slew of reform measures,” said Jayant Manglik, President-Retail Distribution, Religare Securities Limited.
Domestic currency also got a boost after India and Japan decided to expand their bilateral currency swap facility to $50 billion from $15 billion, he added.
However in the offshore non-deliverable forwards, the one-month contract was at around 66.90 a dollar, suggesting that the weak sentiment on rupee is still prevailing.
The Sensex gained by 290.30 points or 1.53 per cent to close at 19270.06 as bank stocks gained further by 2.89 per cent followed by capital goods 2.77 per cent.
“The robust performance was supported by a significant recovery in rupee and healthy global cues as market participants are expecting better economic conditions going forward,” said Mr. Manglik.
Underperformers such as capital goods and power counters were seen developing some buying interest which was an early indication of value investing, said Mr. Manglik. Besides, banking stocks also kept the upside momentum intact which aided the benchmark index to close around the day’s high. However, a widespread rally was missing; Consumer durables lost 0.66 per cent, realty 0.17 per cent, automobiles 0.02 per cent and information technology 0.01 per cent, automobiles 0.02 per cent and information technology 0.01 per cent.
On the National Stock Exchange (NSE), the Nifty closed at 5680.40 with a gain of 87.45 points or 1.56 per cent.
“Markets will continue to remain choppy and trade within a range of 5100-5700 over the medium-term,” said Ajay Bodke, Head-Investment Strategy & Advisory, Prabhudas Lilladher Pvt Ltd.