| Sensex scales four-month high, rupee strengthens |
MUMBAI The BSE Sensex touched a four-month high on Tuesday as rate-sensitive companies rallied on hopes the Reserve Bank of India (RBI) will be pressured into cutting interest rates after the finance minister said high borrowing costs were burdening consumers.
The rupee rose to a three-week high extending gains for a third consecutive session on the back of a more favourable global risk environment and large dollar sales by domestic companies. The partially convertible rupee gained 45 paise to close at 55.0650/0750 per dollar as per the SBI closing rate versus its previous close of 55.52/53.
The 30-share BSE index rose 1.08 per cent, or 188.82 points, to 17,601.78 points after earlier touching its highest intraday level since April 3.
The 50-share NSE index gained 1.03 per cent to end at 5,336.70 points.
The session marked the second consecutive gain of over 1 per cent for domestic indexes after the comments from newly-appointed P. Chidambaram on Monday boosted stocks that would benefit from lower rates such as State Bank of India.
Software service exporters such as Infosys also rallied after US rival Cognizant Technology Solutions raised its adjusted full-year profit forecast.
Chidambaram’s promise for fiscal reforms also helped sentiment, easing some of the growing worries the government would delay action, despite facing slowing economic growth and a worsening global risk environment.
However, analyst kept a dose of skepticism about whether the stock gains marked a true turnaround.
“Last 2 days have been driven by global cues and Chidambaram’s comments, but the rally have been a surprise to many,” said Vivek Mahajan, head of research at Aditya Birla Money.
“There is some consolidation in offing now. Maybe Nifty would get support at 5,150, due to running fiscal deficit worries and scanty monsoon rains.”
Interest-rate sensitive stocks gained on hopes the government would at least push the RBI to use its monetary lever. Auto makers gained as lower rates would bring down financing costs when purchasing new vehicles. Tata Motors rose 4.3 per cent, while Bajaj Auto rose 1.3 per cent.
Agencies
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