PM Modi to review economic situation: Sensex rises over 300 points, rupee recovers 73 paise from all-time low
BusinessToday.In September 12, 2018
The Sensex and Nifty staged a smart recovery in afternoon trade today amid report that PM Narendra Modi would hold a meeting to discuss economic scenario and the deteriorating rupee situation over this weekend. The rupee too recovered a strong 73 paise from its all-time low of 72.91 hit today on some measures likely to be announced after the PM-chaired meeting. The currency closed at 72.18 level, revealing a smart rise of 51 paise or 0.70 per cent-the biggest one-day gain for the domestic unit since May 25.
While the Sensex rose 325 points to hit an intra day high of 37,738, the Nifty recovered 93 points to touch 11,380 level.
Top gainers on the Sensex were PowerGrid (3.40%), Adani Ports (3.14%), and ITC (3.11%).
The BSE Sensex, which opened in the green, surged in late afternoon trade to finish higher by 304.83 points at 37,717.96. The broader NSE Nifty too jumped 82.40 points to end at 11,369.90.
Rahul Sharma, senior technical research analyst at Equity99 said, "Rupee's depreciation is top concern for market sentiment. On Wednesday after hitting fresh low of 72.91, rupee has shown smart recovery up to 72.15 level. With recovery of rupee, market turned positive and ended on positive note.
Nifty has formed bullish hammer pattern at bottom which is positive sign. For Friday's trading 11,130 will act as strong support, break with volume will create fresh panic up to 11,250. On the upper side, it will fact hurdle at 11,450 level."
Consumer goods stocks led the gains on the Sensex with the BSE Fast Moving Consumer Goods Index rising 2.40% or 281 points to 11,997.
Metal index too rose 1.52% or 206 points to 13,779 level.
Madhavi Arora, economist, forex and rates at Edelweiss Securities said, "Rupee has seen a dramatic turn in the last one hour, reacting to the news flow that the government will review the health of the economy during the weekend, with focus on the Rupee. Media sources also say that Government has stated it is not ruling out interest rate hike by the RBI.
While it is difficult to really decipher a statement by government official on a monetary policy decision (that falls purely in the purview of the MPC), it does raise the case for a policy rate hike, albeit still on the scheduled October 5 MPC policy. We still do not think a pre-emptive rate hike over the weekend is warranted at this point and the policymakers can explore other tools as well."
The Sensex had lost nearly 1,000 points during the last two sessions on a falling rupee, rising crude oil prices, widening current account deficit and global trade tensions which dampened investor sentiment.
Nifty too lost 300 points during the last two sessions on volatility arising out global trade tensions and weak trade data at home.
India's current account deficit (CAD) widened to $15.8 billion, which is around 2.4 per cent of the country's Gross Domestic Product (GDP), for the quarter ended June as compared with $15 billion in the same quarter a year before, according to data announced on Friday. The weakening rupee against the US dollar and high crude oil prices in the international market led to a rise in current account deficit in the first quarter.
Rupee fell against the dollar to a fresh all-time low in early morning trade today on high crude oil prices and capital outflows on worries over US-China trade war. On Tuesday, foreign institutional investors pulled out Rs 1,454 crore from the Indian stock markets-their highest daily outflow in over three months.