The BSE Sensex surged over 700 points on Tuesday as markets rallied for a fourth straight day tracking gains in the rupee and positive global cues. The broader Nifty jumped over 190 points or 3.2 per cent and traded above the key 5,850 levels.
The Nifty is now trading above the 200 day moving average, considered to be a bullish signal. Traders said there is optimism in markets after foreign investors bought nearly Rs 1,800 crore worth of cash shares in the previous two sessions.
The key to bullish sentiments, however, was the sustained recovery in the Indian rupee, which traded close to the 64 per dollar mark. The rupee has now gained around 6.5 per cent since Raghuram Rajan took over as the new governor of the Reserve Bank.
Dr Rajan’s announcements to defend the rupee have sparked badly-needed optimism among investors. Gaurav Kapoor of RBS told NDTV that Dr Rajan has changed the thinking that central bank has a hands off approach to the rupee.
The rupee traded at a two-week high of 64.12 as of 2.15 p.m. gaining 1.7 per cent against Friday’s close at 65.24 per dollar. The partially convertible rupee is on track for its fourth straight day of gains after snapping a three-week losing streak.
The rupee tracked higher euro, which gained against the dollar after disappointing US jobs data raised hopes that the Fed Reserve may be hesitant to announce tapering of stimulus as early as next week. (Read: 10 reasons why the rupee has jumped)
Gains in stock markets were driven by banking stocks, which have rallied tracking the rupee’s movements. The Bank Nifty traded 2.5 per cent higher and reclaimed the 10,000 mark, closely tracked by technical analysts.
Mayruesh Joshi of Angel Broking told NDTV that steps taken by Raghuram Rajan are not only aiding the Indian rupee, but also leading to a huge momentum in the Bank Nifty.
Auto stocks jumped over 5 per cent led by Tata Motors, which traded with around 10 pe cent gains. Telecom stocks gained on regulators recommendations to cut spectrum prices.
Favourable global factors also helped sentiments on the Street today. Asian stocks rose to a three-month high on Tuesday as investors turned their attention to more data out of China, while oil nursed heavy losses as fears of an imminent U.S. military strike against Syria receded even further.
A recent run of upbeat factory activity data from China, Europe and the United States further underlined that the global economy was on a firmer footing.