Sensex jumps, rupee gains as Syria fears subside
The rupee, on Tuesday, gained Rs. 1.40 to 63.84 against the dollar and the BSE Sensex jumped 727 points to 19,997 as fears of a US attack on Syria eased and weak US jobs data sparked hopes that the Federal Reserve would defer the unwinding of its stimulus package.business Updated: Sep 10, 2013 23:38 IST
The rupee, on Tuesday, gained Rs. 1.40 to 63.84 against the dollar and the BSE Sensex jumped 727 points to 19,997 as fears of a US attack on Syria eased and weak US jobs data sparked hopes that the Federal Reserve would defer the unwinding of its stimulus package.
Rising exports and a decline in India’s trade deficit to a five-month low of $10.9 billion also helped the twin rallies. Gold prices in Mumbai declined Rs. 550 to a three-week low of Rs. 30,420 per 10 grams.
But experts said the buoyant mood may not last as the Indian economy is caught in a low-growth spiral and the current account deficit (the gap between dollar inflows and outflows) remains a cause for concern.
Then, data on industrial output, inflation and advance taxes are due this week. The Fed meet on unwinding its stimulus package is due on September 18 and new Reserve Bank of India governor Raghuram Rajan will unveil his first monetary policy next Friday. The markets will turn volatile if there is negative news from any of these quarters.
Since Thursday, the rupee has gained R3.79 paise or 5.6% in four straight sessions, helped by the reformist steps announced by Rajan on September 4. Tuesday’s rise was the biggest since August 29 when it had gained Rs. 2.25.
On the BSE, where the Sensex, which briefly crossed the 20,000-mark, posted its biggest one-day gain in four years, all the sectoral indices closed higher. The auto index (up 6%) was the biggest gainer, followed by FMCG (5.17%) and capital goods (5.08%).
“Moderately good set of auto sales numbers for August lifted the prices of auto stocks,” said Alex Mathews, head of research, Geojit BNP Paribas Financial Services.
Shares of Tata Motors jumped more than 10% to a 52-week high of Rs. 352 before closing at Rs. 349.20 as Jaguar Land Rover reported a 28% rise in global sales in August.
“But there is a lot of uncertainty that can still impact the markets. Fears of a sovereign downgrade, growing NPAs at banks and the looming elections are just some of them,” said G. Chokkalingam, MD, Centrum Wealth Management.