Shares flared up on smart rebound in rupee value coupled with steep hike in gas prices amid hopes US Fed will delay tapering monetary stimulus as the S&P BSE benchmark Sensex spurted 622 points to end at a three -week high of 19,395.81 points.
Hectic short-covering activity during the week in view of expiry of derivatives contract on June 27 also boosted the market, which snapped a three-week losing streak and posted handsome gains.
In a major step forward in energy sector reforms, the Centre on Thursday approved near doubling of natural gas prices to USD 8.4 per mmBtu from April 1 next and okayed setting up of a coal regulator. Last week, it allowed power producers to pass through higher imported coal prices.
Recovery in the rupee value to 59.21 levels at the tail-end of the week, which touched a historic low of 60.76 against dollar on Wednesday, after current account deficit (CAD) moderated "sharply" to 3.6 per cent of GDP in March quarter of 2012-13 fiscal from 6.7 per cent in December quarter, calmed nervous investors.
The Bombay Stock Exchange 30-share barometer resumed lower at 18,714.06 and dropped further to a two-month low of 18,467.16.
However, it recovered after mid-week to hit a high of 19,432.94 before finishing at 19,395.81, showing a smart gain of 621.57 points, or 3.31%. The key index had dropped by a massive 986.06 points, or 4.99%, in the last three weeks.
The wide-based 50-share CNX Nifty of the NSE also rose by a healthy 174.55 points, or 3.08%, to end at a three-week high of 5,842.20.
It had dropped 318.30 points, or 5.32%, in the last three weeks. The possibility of maintaining its bonds purchasing programme by the US Federal Reserve for a longer period of time after US first-quarter GDP growth was revised down to 1.8% from 2.4%, boosted the market sentiment in the last two days of the week.
Buying was seen mostly across-the-board as 11 out of 13 sectoral indices closed in the green while only BSE-CD and BSE-FMCG ended in the red.
Overall 25 out of 30 sensex-based scrips finished with gains while others settled with losses.
Petro-chem giant and among the top heavyweights, RIL, was the top gainer from the sensex pack with a rise of 8.56% followed by GAIL India 7.80%, ONGC 7.16%, TCS 6.74%, Hindalco 6.57%, Jindal Steel 6.39%, HDFC 6.31%, Sun Pharma 6.17%, Tata Power 5.45%, HDFC Bank 5.16%, Bajaj Auto 4.78%, Dr Reddy's Lab 4.31%, Sterlite Ind 3.60%, Infosys 3.06%, Cipla 2.64%, M&M 2.60%, ICICI Bank 2.53%, Hero MotoCorp 2.30% and BHEL 2.14%.
However, Tata Motors declined by 1.99%, SBI by 1.85%, Maruti Suzuki by 1.09% and HUL by 0.98%.
From sectoral indices, S&P BSE-Oil&Gas flared up by 6.59%, S&P BSE-IT by 4.06%, S&P BSE-Teck 2.88%, S&P BSE-Bankex 2.24%, S&P BSE-HC by 2.17%, S&P BSE-Power by 2.02% and S&P BSE-Metal 1.96% while S&P BSE-CD declined by 5.98% and S&P BSE-FMCG by 0.44%.
Second-line stocks underperformed the sensex on selling by cautious retail investors as the BSE-Smallcap and the BSE-Midcap indices closed down by 1.29% and 1.21%, respectively.
Meanwhile, Foreign Institutional Investors (FIIs) remained net sellers and they pulled out Rs. 3,126.59 crore during the week, including provisional data of June 28.
The total turnover for the week on the BSE and the NSE was higher at Rs. 8,701.01 crore and Rs. 60,801.28 crore from Rs. 7,884.26 crore and Rs. 49,317.29 crore last week.
Forex: The Indian rupee bounced back from its life-time low of 60.76 logged on Wednesday, still closing down by 12 paise to settle at 59.39 against the Greenback during the week under review, extending losses for the eighth straight week.
The rupee commenced the week on sluggish note at 59.55 a dollar from last weekend's close of 59.27 and tanked further to an all-time low of 60.76 on Wednesday following month-end dollar demand from oil importers and sustained foreign funds outflows from debt and equity markets, amid speculation that the RBI stepped in to check the currency slide.
Rise in the US currency in overseas market after US Fed said it may taper off its USD 85 billion a month bond buying programme from later this year and ultimately end at 2014.
However, a sharp moderation in current account deficit (CAD) to 3.6% for the March quarter from 6.7% in the previous quarter and against expectations of 4.4% later aided the rupee to rebound from its historic low.
Hopes of US Fed may delay the plan to taper of monetary stimulus too boosted the rupee sentiment and it bounced back with a vengeance to a high of 59.21 before ending the week at 59.39, still showing a fall of 12 paise or 0.20%. In straight eight week, it has collapsed by 545 paise or 10.10%.
Strong equities on the last two days of the week too aided the rupee rally at the fag end of the week. The Indian benchmark S&P BSE Sensex spurted by 621.57 points or 3.31%, snapping three-week of losing string.
FIIs, however, sold shares worth $509.58 million on the first four days of the week as per Sebi data. Crisil Research however, believes that the current flight of capital and sharp plunge in rupee is a short term phenomenon and largely in response to the uncertainty around the impact of the US Fed's pullback of quantitative easing.
"Moreover, the government is pledging a slew of domestic policy reforms to shore up domestic and foreign investor sentiments. This, if successfully done, can act as a pull factor for foreign capital inflows," it said.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt Ltd said, "This week Rupee made a new low of 60.76 and in futures also it crossed the psychological figure of 61 indicating the possibility of further depreciation.
"Rupee has already depreciated over 12% in last 2 month and is expected to go down further to the 62 levels in coming days due to local factors and CAD issue as the Investments cycle are not picking up in India which is making CAD more vulnerable."
"Though Rupee tried to fight back in the second half of the week taking cues from strong equity markets which rallied after the government approved to double the domestic gas prices from next April 2014. Spot Rupee appreciated by over 1.3% during last trading day and managed to close above 59.50 levels. Trading range for the spot Rupee is expected to be within 59.00 - 60.00," he added.
"On Friday, the rupee registered its biggest gain of 80 paise in the last nine months. The recent CAD figures along with yesterday's RBI norms on currency bets by the FIIs have contributed for the appreciation in the rupee.
"Technically, rupee looks to be in the correction mode and is likely to appreciate against the US dollar in the next week," said Abhishek Goenka, Founder and CEO, India Forex Advisors. The rupee premium for the forward dollar ended mixed on alternate bouts of buying and selling.
The benchmark six-month forward dollar premium payable in November finished lower at 143-145 paise from last weekend's close of 151-1/2-153 paise, while far-forward contracts maturing in May ended up at 312-314 paise from 310-1/2-312 paise.
The RBI fixed the reference rate for the US dollar at 59.6995 and for the euro at 77.9760 from previous weekend's level of 59.3505 and 78.5930, respectively.
The Rupee bounced back against the pound sterling to 90.54 from preceding weekend's close of 91.58 and also recovered smartly against the euro to end at 77.62 from 78.26.
It too strengthened against the Japanese yen to 59.97 per 100 yen from last weekend's close of 60.65.