Mumbai: Stocks on July 2 made new life-time highs and the rupee rose the most in seven weeks as overseas funds poured in on growing optimism that the Modi government would unveil strong measures in the Budget next week to put finances and the economy back on track. Stock and currency markets were enthused after Finance Minister Arun Jaitley on July 1 said the government would take bold decisions and pursue path of fiscal prudence to revive economy, indicating that his maiden budget will not indulge in 'mindless populism'.
The BSE Sensex intra-day hit life high of 25,864.53 and settled at a new peak of 25,841.21, gaining 324.86 points, or 1.27 per cent — extending its string of gains to fourth day. In this pre-budget rally, Sensex has risen 778.54 points. The broad-based 50-issue CNX Nifty of the NSE flared up by 90.45 points, or 1.18 per cent, to log its new closing peak of 7,725.15. It touched an intra-day peak of 7,732.40. Nifty has gained about 232 points in four days so far.
"We feel that, a progressive budget as well as other reform initiatives will likely lead to continued out performance of Indian indices v/s emerging market peers. The rise in railway passenger fares and freight charges have raised hopes of a reforms-oriented budget," said Dipen Shah, Head- Private Client Group Research, Kotak Securities. Foreign investors continued to play a key role behind the pre-budget rally as they bought scrips valued at Rs 1,290.68 crore on July 2.
On July 1, they had picked up shares worth Rs 856.35 crore, as per provisional data. The rupee on July 2 appreciated 38 paise — its biggest single-day rise in seven weeks — to close at 59.69 against the US dollar. Dollar selling by exporters amid lack of dollar demand from importers and continued capital inflows also helped the rupee rise for the second day in a row. "INR appreciated against the Dollar on speculation that the government could reveal measures in the budget next week to boost the economy," said Suresh Nair, Director Admisi Forex.
