Strong rupee gets foreign booster dose

Rupee hits eight-month high; share markets end flat after hitting a lifetime high

Mumbai: After touching their all time high, while the equity markets paused for a breather on Tuesday, the Indian rupee continued with its winning momentum against the US dollar and rallied close to its eight month high following heavy buying of local shares by foreign institutional investors.

A general weakness in dollar against a basket of major currencies also helped the Indian rupee to register impressive gains against the US dollar.

Posting its third consecutive day of gains against the US greenback, the partially convertible rupee closed the day at 60.48 levels against the dollar as compared to its previous day’s close of 60.77 per dollar. The provisional data from the stock exchanges showed that foreign institutional investors (FII) purchased shares worth Rs1,223.28 crore on Tuesday.

“Globally, the US dollar index was flat near 80.00 levels, and all the major Asian currencies were trading on a positive note. Persistent dollar inflows in the equity and debt market are supporting the rupee at the moment. Though the monthly dollar demand is likely to put pressure on rupee the positive sentiments due to relentless flows are expected to limit its downside,” said Abhishek Goenka founder and chief executive officer (CEO), India Forex Advisors.

Foreign funds bought shares worth $240 million on Monday, taking their total purchases in 2014 to $2.6 billion. Foreign inflows into the debt market stand at a net $5.9 billion so far this year.

Meanwhile, the equity markets hit an all-time high in the intra-day trade led by banking sector stocks, but couldn’t sustain their winning momentum at higher levels as index heavyweights RIL and ONGC dropped after Election Commission asked the government to defer the gas price hike until after the general elections.

After touching a record high of 22,079.96 in the intra-day trade, the Sensex finally ended the day on a flat note at 22,055.21, down marginally by 0.27 points. The Nifty ended the day at 6589.75, up marginally by 6.25 points after hitting an intra-day high of 6,595.55.

“While disappointing, we note that this only defers the eventual outcome unless the new government scraps the Cabinet decision (ratified twice) to raise prices in accordance with the exhaustively deliberated Rangarajan framework altogether. This is unlikely, in our view, unless a non-NDA non-UPA disposition is in power,” said Barclays in a note to its clients.

Most emerging Asian currencies turned weaker as the Chinese yuan retreated, failing to keep earlier gains even though hopes for economic stimulus from Beijing could improve regional sentiment.

In the offshore non-deliverable forwards, the one-month contract was at 60.92 while the three-month was at 61.59.

( Source : dc correspondent )
Next Story