Raghuram Rajan impact: Sensex zooms 412 pts, rupee up 106 paise
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Raghuram Rajan impact: Sensex zooms 412 pts, rupee up 106 paise

Last Updated: Thursday, September 5, 2013, 23:30
 
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Raghuram Rajan impact: Sensex zooms 412 pts, rupee up 106 paise
Mumbai: The markets Thursday gave a high-five to new RBI Governor Raghuram Rajan for his steps to shore up the currency and revive growth with rupee soaring 106 paise to 66.01 and Sensex jumping 412 points to over 3-week high.

Even as some sceptics suggested that Rajan -- formerly a chief economic advisor at the Finance Ministry -- will find it a challenge to reverse a slowing economy, markets appeared confident about Rajan, who famously predicted the 2008 financial crisis three years before it occurred.

The benchmark S&P BSE Sensex soared 412 points to end at 18,979.76 -- its highest level since August 14, when it closed at 19,367.59. Yesterday, the Sensex had gained 333 points on investor optimism about the new RBI Governor.

Similarly, the rupee appreciated further, adding 106 paise to 66.01 against the dollar, after measures taken by Rajan on his first day in office to attract US currency inflows boosted market sentiment.

Rajan yesterday announced steps such as enhanced limits for exporters to re-book cancelled forward exchange contracts and a special concessional window to swap foreign currency non-resident (FCNR) deposits. Experts see banks mobilising around USD 10 billion from the swap facility.

"Banking stocks rallied on the back of steps announced by governor Rajan to support rupee and liberalise banking system," said Amar Ambani, Head of Research, India Infoline.

Government bonds fell on profit-taking after prices jumped in early trade. The benchmark 10-year bond yield, which fell over 20 basis points in opening deals to 8.16/8.17 percent, ended just 3 basis points up at 8.42 percent.

Gold suffered the second biggest fall in a week, dropping Rs 1,250 to Rs 30,950 in Delhi. Prices dropped heavily in Mumbai and Kolkata while there was a Rs 130 rise in Chennai.

However, analysts such as Dhananjay Sinha, Head - Institutional Research, Emkay Global Financial Services, remain "unenthused", saying some of Rajan's intents are a carry-forward from the previous governor's actions.

"Many of the initiatives enlisted by him as a roadmap through his term bear some stamp of his predecessors," he said.

PTI


First Published: Thursday, September 5, 2013, 19:09


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