Thursday, August 29, 2013

Rupee recovers on RBI dollar window, Sensex gains 405 points

August 29, 2013 (7star news):-The BSE Sensex closed 405 points higher on Thursday tracking gains in the Indian rupee, which rose as high as 66.85 per dollar from a record low of 68.85 per dollar on Wednesday. The 50-share Nifty advanced 124 points to end above the key 5,400 levels.

The Reserve Bank of India said it will provide dollars directly to state oil companies in its latest attempt to shore up the battered currency. The decision is aimed at removing a major source of dollar demand from the spot market - worth $400 million to $500 million daily - and to reduce downward pressure on the Indian rupee.

The decision not only lifted the rupee, which traded at 67.38 as of 3.40 p.m., but also led to buying in oil stocks. The BSE Oil and Gas index gained around 3 per cent.

Market analyst Sharmila Joshi told NDTV that it\'s heartening to see that the RBI\'s swap window has helped the rupee. The recovery is good and beaten down stocks are showing resilience, she added.

Metal, auto, capital goods and healthcare stocks rallied over 2 per cent, while banking stocks also rebounded after three days of selloff. IT stocks, which saw a great run so far on the back of weak rupee, extended gains. Tata Consultancy Services, India\'s biggest outsourcer, closed 2 per cent higher after earlier marking its all-time high.

It was mostly a one-way Street for stock markets today despite the scheduled expiry in August derivatives.

\"If we would have ended at 5200, the next series would have started on a weak note,\" Ms Joshi added.

The improved sentiment was also helped as Asian shares recovered while emerging market currencies stabilised as fears abated that U.S.-led forces would soon launch a military strike against Syria.

Rupee recovery sustainable?

The Reserve Bank of India (RBI) said it was providing a special window with immediate effect to sell dollars to Indian Oil Corp Ltd, Hindustan Petroleum Corp, and Bharat Petroleum Corp Ltd. Oil represents India\'s biggest import item.

However, analysts said the RBI measures alone would not lead to a sustained rupee recovery unless the government can pass measures that can convince markets of its willingness to tackle India\'s fiscal and current account deficits and slowing growth.

\"The measure is unlikely to arrest the decline in the INR with the authorities increasingly trying to find new means to stem the rout in the currency,\" Mitul Kotecha, head of global markets research for Asia at Credit Agricole in Hong Kong, said in an email to clients.

The defence of the rupee has largely rested so far on the RBI\'s shoulders. Yet its plan to drain cash from markets and curb speculative trading is becoming increasingly controversial as bond yields have surged, raising borrowing costs in an economy already growing at its slowest pace in a decade.

At the same time, the government has struggled to inspire confidence despite a slew of measures to raise dollars from abroad and curb imports of gold and oil that have most contributed to a record current account deficit.
News From:

No comments:

eXTReMe Tracker