The rupee recovered from Wednesday’s close of 79.99 to close 4 paise higher at 79.95 against the US dollar on Thursday, following the overall weakness in crude oil prices and fresh foreign fund inflows. With foreign portfolio investors (FPIs) pumping money, the benchmark Sensex rose by 284 points to 55,681.95 and the NSE Nifty Index gained 84 points at 16,605.25.
With Thursday’s gain, the Sensex has shot up by 1,921 points this week.
FPIs, who pulled out Rs 2.28 lakh crore since January, invested Rs 1,799 crore on Thursday, raising expectations that FPIs will start investing in India again at low levels. Further, oil prices fell by more than $5 on Thursday after higher US gasoline stockpiles and an ECB rate hike stoked demand worries and returning oil supply from Libya eased supply concerns.
The rupee has been under pressure amid concerns about the interest rate normalisation path of the US Federal Reserve and the deteriorating growth environment which have led to a global flight to the dollar, while causing an exodus of foreign funds from the domestic markets.
“With support from FPI buying, the domestic market was able to withstand the downward pressure from global markets to close on a positive note. Global indices traded lower on rate hike worries as ECB in its meeting, raised rates while the Fed is expected to increase rates by 75 bps in the upcoming meeting scheduled next week. Even though a rate hike of this magnitude has already been factored in, the major driver would be their commentary on future inflation and growth forecasts,” said Vinod Nair, head-research, Geojit Financial Services.
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Asian shares were mixed Thursday as optimism over earnings was tempered by persistent concerns about inflation and the Chinese economy. Bank of Japan wrapped up a two-day policy meeting, and made no major changes.
European stocks slipped Thursday as investors had braced for the European Central Bank’s first interest rate hike in 11 years, while Russia resumed sending gas to Europe through a key pipeline, dispelling investors’ worst fears, said Deepak Jasani, head of retail research, HDFC Securities.