The Hindu : Sensex, rupee hoist new peaks

Online edition of India's National Newspaper
Saturday, Oct 04, 2003

Business

Business

Sensex, rupee hoist new peaks

By Our Special Correspondent

MUMBAI OCT. 3. The financial markets today witnessed a rally across the board with the rupee gaining 17 paise against the dollar and the equities surging past the psychological 4500 level to end at its 38-month high. In two trading days this week, the rupee gained 43 paise which surprised many market participants. However, a rally in stock indices was along expected lines.

Spurred by sustained heavy foreign funds inflows, export proceeds and expatriate remittances, the rupee surged to hit a new 38-month closing peak, helped partly by a relatively weak U.S. unit against global currencies.

Breaching the crucial 45.50 a dollar psychological barrier in early trading, stop-loss dollar sales, drove the rupee through the next resistance level of 45.40, before settling at 45.39/40, dealers said. The rupee opened distinctly firm at 45.53/56 from Wednesday's finish of 45.56/57, aided by bunched up dollar supplies. The forex market remained closed yesterday on account of Gandhi Jayanti.

In volatile trading at the interbank foreign exchange market, the rupee's bull run against the greenback continued unabated, driven-up by persistent strong trade and capital inflows.

"With the successful redemption of Resurgent India Bonds (RIBs), a strong negative sentiment on the rupee's bearishness has been ruled out," said K. N. Dey, a leading Mumbai-based forex analyst.

Further, the strength of the rupee is also coupled with the weakness of the dollar in the international market, which is led by the strength of the euro. The Japanese yen too strengthened to its three year high against the dollar. This could add further strength to the rupee.

Meanwhile, equities witnessed a huge rally of 97.84 points or 2.20 per cent to record a 37-month high at 4552.92 on huge buying in bluest of blue chip stocks at the week's close as the index heavyweights staged a stunning rally. However, the market witnessed selling pressure in technology stocks in the latter part of trading.

The biggest rise was seen in Shipping Corporation of India (SCI) which rallied by 27.08 per cent on frantic buying activity after the company announced a whopping Rs. 17 per share or 170 per cent special interim dividend for 2003-04. The steep rise in SCI also generated heavy buying in several other shares, brokers said. SCI opened the day marginally higher at Rs. 116.60 and as soon as the declaration of encouraging dividend, prices skyrocketted to close at an intra-day high of Rs. 141.00, showing a steep rally of Rs. 30.05 over the previous close of Rs. 110.95.

The Bombay Stock Exchange 30-share sensitive index today opened at 4465.44, touched a high of 4556.89, declined to a low of 4465.44 and finally closed at 4552.92, gaining 97.84 points from its previous close of 4455.08.

On the National Stock Exchange, the Nifty also increased by 28.45 points to end at 1449.30 against the previous close of 1420.65.

Even though sentiment was down in technology counters, investors were flocking to buy economy and defensive stocks as the market participants were optimistic about the economy and its growth rate.

The mood on the market was bullish ahead of a crucial meeting of the Cabinet Committee on Disinvestment (CCD), which is expected to discuss the disinvestment of Hindustan Petroleum and Bharat Petroleum among others.

Moreover, foreign institutional investors were also net buyers (foreign exchange inflow also boosted the Indian rupee against the dollar) with an inflow of Rs. 256.10 crores on September 30 and the total inflow reached Rs. 4,175 crores in September against Rs. 2,227.5 crores in August.

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