Mumbai, Sept. 6: The stock and forex markets continued to swoon over RBI governor Raghuram Rajan’s debut day policy pill with the benchmark S&P BSE Sensex surging 290 points to close above 19000 for the first time in three weeks and the rupee rising 77 paise to 65.24 against the dollar.
Banking shares, led by ICICI Bank, remained the favourites following the announcements by Rajan on Wednesday.
Renewed buying by foreign institutional investors boosted sentiment. They bought a net Rs 1,101.41 crore of shares yesterday, according to provisional stock exchange data.
After adding 739 points in the previous two sessions, the Sensex resumed higher and moved in a range of 18929.38 to 19293.96 before ending at a three-week high of 19270.06, a rise of 290.30 points, or 1.53 per cent. The index has gained 650.34 points, or 3.49 per cent, this week.
“Markets have reacted on cues from the currency markets,” said Dipen Shah, head of private client group research at Kotak Securities.
“Further initiatives on the rupee and on fiscal reforms will help in taking the markets higher.”
The CNX Nifty on the NSE rose 87.45 points, or 1.56 per cent, to a three-week high of 5680.40.
The rupee today opened at 66 against the dollar from 66.01 previously at the interbank foreign exchange market and touched a low of 66.32. It bounced back to a high of 65 before settling at 65.24, a rise of 77 paise, or 1.17 per cent, the highest level in almost two weeks.
Dollar sales by exporters, a weak US currency overseas and renewed capital inflows also helped the rupee to gain.
Enhanced limits for exporters to re-book cancelled forward exchange contracts and a window to swap foreign currency deposits are some of the measures brought in by Rajan to attract dollar inflows.
The RBI’s liquidity-tightening measures may be rolled back by October as the market sentiment and the rupee are expected to improve, Barclays said in a report.
News from the G-20 Summit at St Petersburg in Russia also appeared to give hope to investors.
The Brics group yesterday decided to launch a $100-billion currency reserve fund to help them navigate through any phase-out of the US stimulus.
Separately, India and Japan today expanded their currency swap arrangement to $50 billion from $15 billion.
Banking, capital goods, PSUs and refinery stocks were in the limelight.
Besides ICICI Bank, which gained 7.37 per cent, ONGC rose 7.17 per cent. Together, the two stocks contributed 138 points to the Sensex gain. The other big gainers were Bharti Airtel (5.47 per cent), Cipla (4.49 per cent) and Larsen and Toubro (3.58 per cent).
Asian stocks ended mixed ahead of the monthly US jobs report. Key indices in China, Hong Kong, Singapore and South Korea rose, while indices in Japan and Taiwan declined. Indices in France, Germany and the UK were trading lower.
The market breadth remained positive as 1,311 stocks ended higher, while 996 finished lower and 146 ruled steady.