The benchmark S&P BSE Sensex today rose 39 points, settling in positive terrain for the third straight session, after erasing most of its early gains as the rupee once again weakened past the 64-mark against the dollar.
Brokers said trading sentiment was initially firm after the finance ministry indicated that steps to attract capital flows to fund the current account deficit can be expected within a week. The announcement followed finance minister P Chidambaram's meetings with overseas investors and top bankers in Mumbai on Saturday. The 30-share barometer opened higher and climbed to 18,728.19, a rise or 208.75 points.
Later, selling in banking, refinery and PSU stocks pulled it down to settle at 18,558.13, a gain of 38.69 points or 0.21%. The closing level was the highest since August 16, when it was at 18,598.18. The wider CNX Nifty on the National Stock Exchange edged up 4.75 points, or 0.09%, to 5,476.50. The SX40 index on the MCX-SX closed 60.45 points up at 11,021.18. The fall of the rupee below the 64-mark to near 64.50 per dollar also weighed on sentiment in the stock market. "Some short covering along with cautious buying at lower levels aided market recovery," said Nidhi Saraswat, senior research analyst at Bonanza Portfolio Ltd. "However, market remains wary about the present situation of Indian rupee as well as economic condition of the country."
Power, capital goods, IT and pharma shares attracted buying interest. Heavy electrical equipment major BHEL was the top gainer in the Sensex pack for the second straight day and closed up 6.63%, adding to Friday's 8.1% gain.
The market may remain volatile ahead of the expiry of futures & options August contracts on Thursday. Asian stocks were mixed after a slump in US home sales eased speculation the Federal Reserve will reduce its economic stimulus next month.
Key indices in Hong Kong, China, Taiwan and South Korea ended higher while indices in Japan and Singapore closed lower. In Europe, indices in France and Germany were lower, while the FTSE in the UK gained.
In the domestic market, 19 Sensex shares finished higher, led by BHEL (6.63%), Sterlite Industries (2.79%), Wipro (2.52%), NTPC (2.52%) and Hero MotoCorp (2.35%). ONGC fell 3.16%, followed by GAIL India 3.02% and ICICI Bank 2.58%. Among the sectoral indices, S&P BSE-Power firmed up by 1.56%, S&P BSE-Capital Goods 1.25% and S&P BSE-Healthcare 1.12%.
S&P BSE-Bankex dropped by 1.04% and S&P BSE-Oil and Gas was down 0.43%. The market breadth remained positive as 1,298 shares ended with gains, 992 finished with losses and 148 ruled steady. Total turnover dropped to Rs. 1,847.82 crore from Rs. 1,960.40 crore on Friday. Foreign institutional investors sold a net Rs. 148.57 crore of shares on Friday, as per provisional data from the stock exchanges.