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The rupee rose 1.2 per cent to end the day at 61.74/dollar. “The rupee appreciation of more than one per cent helped prop the markets. Also, there was some short-covering in the market, as the Nifty crossed its 200-day moving average,” said Rikesh Parikh, vice-president (equities) at Motilal Oswal Securities.
The BSE metal index was up 3.9 per cent on expectations of an improvement in September quarter earnings. Among Sensex stocks, Sesa Goa was the highest gainer, rising 7.2 per cent to Rs 188.1 a share. Other Sensex gainers from the metals sectors were Hindalco, Tata Steel and Jindal Steel, each rising about four per cent.
The BSE Bankex saw a 3.4 per cent rise on hope of gains from declining bond yields, analysts said. Axis Bank, Bank of India, Bank of Baroda and YES Bank rose about five per cent each.
A rub-off effect of Asian markets, which rose on Wednesday due to dollar depreciation, was also seen, analysts said. Currencies and equities in emerging markets across the region strengthened. The only exception was the Indonesian market, which saw a rise in equities, but a decline in its currency.
The market was rattled by what analysts termed a freak trade in Nifty futures in the October series. The trade took the Nifty futures to 5,996, up 2.9 per cent from Wednesday’s close, in about two minutes. At that point, the index was at 5,900.
Global equity markets have been buoyed by the government shutdown in the US, which has seen capital flowing into emerging markets. “The shutdown in the US has provided opportunities to emerging markets. Typically, when the US is faced with a shutdown, global markets witness a decline. But this time, we are seeing flows into emerging markets, causing local currencies to strengthen and boost equity markets,” said Niraj Kumar, head of equity investments at Aviva Life Insurance.
On Thursday, foreign investors were net buyers of equities at Rs 997 crore, while domestic institutions were net sellers at Rs 492 crore.
Kumar said investors were breathing easy, as the possibility of the US Federal Reserve tapering its bond-buying programme in December seemed low in the wake of the shutdown in that country. Market participants now believe the tapering could be deferred to next year.
“The US Fed’s tapering seems to have been indefinitely delayed, which is causing markets to move up and the rupee to strengthen,” said Sankaran Naren, chief investment officer (equities), ICICI Prudential Asset Management.
The liquidity that has come into the markets has found its way into beaten-down sectors such as capital goods, metals and mining, as investors are looking for trading opportunities. “Data from China and Europe have been encouraging and there is hope of recovery there. Chances are there might be a revival in the commodities cycle, which could bode well for these sectors,” Kumar said.
