Mumbai, Aug. 30: The week ended on a happy note with a rally in both stocks and the rupee.
The Sensex rose 219 points to 18619.72, while the rupee recovered 85 paise to close at 65.70 against the dollar.
A combination of factors that included intervention by the Reserve Bank of India (RBI) in the forex markets, the easing of tensions over Syria and an assurance from Prime Minister Manmohan Singh that the government was not planning any capital control measures provided the boost.
At the interbank foreign exchange market, the local currency resumed at 67 from the previous close of 66.55 and dropped to a low of 67.43.
Forex circles said the central bank stepped in on more than one occasion with the rupee posting its second consecutive session gain on dollar selling through state-run banks.
Analysts said statements from Singh in both the Houses of Parliament also played a part.
“Though there was nothing exciting or new which he (Manmohan Singh) mentioned, his statements were sort of a reassurance,” a senior official from a foreign brokerage said.
The appreciation in the rupee’s value rubbed on to stocks. While the BSE Sensex had opened marginally higher at 18424.72 from the previous close of 18401.04 and initially stayed strong, it came under pressure after lunch. There was a sharp turnaround towards the last hour of trade that resulted in the 30-share index closing with a gain of 1.19 per cent.
The Nifty index on the National Stock Exchange rose 62.75 points, or 1.16 per cent, to 5471.80.
Investors were also relieved to know that Western nations were not planning military action against Syria, immediately, a development that helped cool crude oil prices.
Experts, however, feel equities may remain under pressure on account of yet another poor GDP data that came after the market hours.
“GDP growth is lower than the expected. We cannot afford to have so low manufacturing growth rate. The government needs to put in more efforts for various reforms. The tax receipts will slow down and the fiscal deficit again will be difficult to curtail.” Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services, said.