The Indian rupee on Monday recovered by 34 paise to close at 71.56 against the US dollar in the wake of the narrowing trade deficit in November and smart gains in domestic stock markets.
The benchmark Sensex continued its winning streak for a fifth straight session with a rise of 307 points as investors maintained their bullish stance in view of the strengthening rupee, narrowing trade deficit and sustained foreign fund inflows.
Forex dealers attributed the rupee gains to the US dollar’s weakness against some currencies overseas and the improving trade deficit numbers. According to Commerce Ministry data, India’s trade deficit came down to $16.67 billion in November from $17.13 billion in October.
However, Brent crude, the international benchmark, was trading at $60.89 per barrel on Monday, higher by 1.01 per cent.
The 30-share BSE Sensex closed at 36,270, showing a rise of 0.85 per cent or 307 points. In the intra-day trade, the gauge hit a high of 36,312. The Sensex had climbed 1,003.21 points in the previous four sessions.
Similarly, the broader NSE Nifty ended at 10,888, a gain of 0.77 per cent or 83 points.
Vinod Nair, head of research, Geojit Financial Services, said, “Markets extended gains led by strong rupee backed by narrowing trade deficit and inflow of foreign funds. Drop in oil prices, strengthening rupee and pick up in domestic macros are providing a positive momentum to the market. However, global market witnessed selling ahead of two-day US FOMC meet starting from Tuesday.”
According to Abhijeet Dey, senior fund manager, BNP Paribas Mutual Fund, sustained buying in index pivotals lent the necessary support to benchmark indices. “Stocks started the day in positive territory and continued to trade with strength through the day to finally close with gains of over 0.50 per cent. Global markets, however, traded on a mixed note.”