Mumbai : After a day’s breather, the benchmark indices Sensex and Nifty resumed record-setting rally to scale new peaks on Monday and logged their best single-day gains in nearly five months, tracking positive global cues as investors took heart from the US Federal Reserve’s “gradual approach” comments on monetary policy tightening.
The BSE Sensex surged over 442 points to close at its life-time high of 38,694.11 and the broader NSE Nifty ended at a fresh record of 11,691.95, rising 134.85 points. Both indices recorded their biggest single-day gains in nearly five months. On April 5 this year, the 30-share Sensex had rallied 577.73 points and the Nifty 50 had jumped 196.75 points.
Last week, US Federal Reserve Chairman Jerome Powell had said that a “gradual approach” to interest rate hikes would be in the best interest of the US economy and jobs generation, lifting Wall Street sentiment at the week’s close. Asian shares too ended higher and European markets were firm in their early deals, tracking Friday’s gain in US stocks.
Also, global markets reacted positively to the People’s Bank of China announcement that it was tweaking its methodology for the fixing of the yuan’s daily midpoint as part of efforts to stabilise the currency market. Sentiment also got a boost on unabated buying by domestic institutional investors (DIIs) and fresh foreign fund inflows, giving push to trading activities.
“Market rallied to new high supported by positive global market followed by Fed’s comment on gradual pace of rate hike which boosted investors sentiment. The rally was broad-based given the sense of improved outlook on account of revival in earnings growth. Despite high valuations, continued buying by FIIs and DIIs adding liquidity in the market,” Vinod Nair, Head of Research, Geojit Financial Services, said.
Rupee dives to fresh closing low
Mumbai: The Indian rupee on Monday retreated sharply to hit a record closing low of 70.16 against the US dollar, plunging by 25 paise despite a huge rally in equities amid easing worries over near-term monetary policy tightening by the US Fed. Indian equity benchmarks Sensex and Nifty today scaled new peaks and logged their best single-day gains in nearly five months, tracking positive global cues as investors took heart from the US Federal Reserve’s “gradual approach” to raising interest rates. On August 16, the domestic currency had tumbled to a historic intra-day low of 70.40 before closing at a life-time low of 70.15 per dollar.
The rupee has been hit by a range of factors including swelling current account deficit, surging global crude prices and lukewarm export growth. Besides, US trade protectionism has also contributed to excess volatility in the forex market. The benchmark Brent crude surpassed the significant $75-mark a barrel once again on re-emergence of a supply shock.
Domestic forex market fluctuated wildly during the trade with the rupee climbing to a fresh one-week high of 69.65 in early trade before surrendering the gains.