Favourable trade data,receding fears of Syrian crisis cheer markets,prop up rupee

Sensex gains 727 points — biggest single-day gain in four years; Rupee gains 140 paise.

Written by ENS Economic Bureau | Mumbai | Published:September 11, 2013 2:35 am

The battered Dalal Street and the rupee are on a strong recovery trail. Receding fears of an imminent US military strike against Syria,favourable trade data and a stronger rupee drove Indian stocks to their biggest single-day gain in four years on Tuesday.

With the rupee gaining further ground after the Reserve Bank of India announced a slew of reform measures and oil nursing heavy losses as chances of a US military strike against Syria declined,the Sensex,which had gained 1,030 points in the past three sessions,zoomed by 727 points,or 3.77 per cent to 19,997.10,after touching 20,000 level. The NSE index Nifty jumped up 216.35 points,or 3.81 per cent to 5,896.75,after touching 5,904.85.

The rupee ended at 63.84 against the dollar,up 140 paise or 2.14 per cent. The rupee rally comes after Raghuram Rajan who took over as the new governor of the RBI on September 4 announced a slew of measures to support the rupee and boost inflows. The RBI which increased FCNR (B) deposit rate,has offered a window to banks to swap their incremental FCNR (B) deposit,mobilised for a minimum period of three years,at a fixed rate of 3.5 per cent for the tenor of the deposit. It hiked the current overseas borrowing limit of banks from 50 per cent of unimpaired Tier I capital to 100 per cent. On Friday,the RBI made it easier for foreign promoters of domestic listed companies to increase their stakes via share purchases.

The rupee rose over 6 per cent in the last four days,the biggest gain since at least 1973,as US jobs data that fell short of estimates tempered concern the US Federal Reserve will cut stimulus this month. Further,India’s trade deficit narrowed to $10.9 billion in August,helped by a double digit rise in merchandise exports,offering some respite for the battered rupee.

Rakesh Tarway,AVP (Research),Motilal Oswal Securities,said,“The market rally continued today due to favourable trade data. Moreover,indications of reduced tension in Syria also helped market.” Telecom stocks gained as much as 8.15 per cent as sector regulator Trai recommended a sharp 60 per cent cut in the floor price of mobile phone spectrum for an upcoming auction after two previous sales drew lukewarm response on high reserve price.

Also,shares of Tata Motors rose by 9.88 per cent to close the day at Rs 349.20 on the BSE as its unit Jaguar Land Rover reported 28 per cent increase in global sales. In intra-day,the stock rose by 10.76 per cent to Rs 352 — its 52-week high.

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