Sensex surges 732 points; rupee rises to 73.57
India’s benchmark index rebounded, recouping a year-to-date advance, as some investors judged Thursday’s sell-off as excessive.
The Sensex rose 2.15%, or 732.43 points, to 34,733.58 yesterday. Year to date, it gained 2%. The gauge had erased its year-to-date gain on Thursday, despite posting its best weekly performance since July.
Yesterday, all except two of 19 sector sub-indexes compiled by the BSE ended higher, led by automakers and energy companies as the price of crude oil headed for the biggest weekly decline since May. Tata Consultancy Services, the nation’s biggest IT company, was the biggest laggard after reporting earnings.
“Some stocks are getting attractive,” after recent declines, Paras Bothra, president of research at Ashika Stock Broking said. “However, investors remain cautious and are seeking more clarity on the outlook for corporate earnings and economic growth.”
The Sensex’s relative strength index dropped back below a threshold Thursday indicating potential overselling, after the gauge fell last week, sliding more than 10% from a peak in August.
Indian equities – Asia’s top performers until recently – have retreated amid a flurry of bad news, from surging oil prices and a slumping rupee to a rout in non-bank lenders following defaults at an infrastructure financier. Further erosion may affect flows to mutual funds, which have repeatedly buffered the nation’s $2tn market against the riskoff mood.
Meanwhile the rupee ended stronger against the US dollar for the third session against yesterday as equities gained due to a fall in global crude oil prices. All eyes are on consumer price inflation and index of industrial production data due later. The home currency ended at 73.57 a dollar, up 0.75% from Thursday’s close of 74.13. The currency opened at 73.80 a dollar and touched an intra-day high of 73.52. The 10-year g-sec closed at 7.984% from its previous close of 8.031%. Bond yields and prices move in opposite directions.
Brent crude oil, which went past $86 a barrel for the first time in nearly four years last week, is currently trading at a three-week low just above $80. The international benchmark lost nearly 5.6% in the last two days.
So far this year, the rupee has declined 13%, while foreign investors have sold $3.84bn and $7.92bn in the equity and debt markets, respectively. Asian currencies were trading higher after US inflation moderated and President Donald Trump was said to be planning a meeting with Chinese President Xi to defuse trade tension.
South Korean won rose 0.87%, Taiwan dollar 0.62%, Indonesian rupiah 0.24%, Philippines peso 0.19%, Singapore dollar 0.17%, Malaysian ringgit 0.07%. However, China Offshore spot was down 0.32%, China renminbi 0.16% and Japanese yen 0.12%. The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.994, down 0.02% from its previous close of 95.017.
The rupee closed at 73.57 a dollar yesterday, up 0.75% from Thursday’s close of 74.13