Sensex rebounds 407 points, rupee tumbles to 65.56
Mumbai: Stocks Thursday rose for the first time in five days with the Sensex vaulting 407 points as investors chased beaten down bluechips, ignoring the continuing plunge of the rupee, which closed at a fresh all-time low of 64.55 after going past 65.5 against the dollar.
The rise in the stock markets helped investors gain over Rs 1.17 lakh crore. The rupee depreciation, largely on account of the burgeoning current account deficit, threatens to stall government moves to revive growth before the next election.
Finance Minister P Chidambaram, who earlier today held 3-hour discussions with RBI Governor D Subbarao and his designated successor Raghuram Rajan, said: "There is no cause for panic that seems to have gripped the currency market and that is feeding into other markets.
"We are confident that stability will return to these markets and we can get on with the task of promoting investment and growth," Chidambaram said.
Led by metal stocks that rose after good Chinese manufacturing data, value-buying helped BSE benchmark Sensex jump by 407.03 points, or 2.27 percent, to end at 18,312.94. In the previous four days, the 30-share index lost over 1,400 points, while the rupee fell from 61.1 to 64.5 in this period.
Experts feel stocks may surrender gains unless the rupee stabilises. "One should maintain cautious approach and wait for sustained recovery in rupee," said Jayant Manglik, President Retail Distribution, Religare Securities.
The rupee plunged to yet another record low of 65.56 today. Government and RBI's steps to lift the rupee have got patchy results and some experts say it will hit 70 soon.
Yesterday's US Federal Open Market Committee's minutes strongly indicated easing of the bond buying programme soon.
This led to a recovery in the US dollar index and a selloff in the global markets. Suspected RBI intervention helped the battered currency to gain some lost ground to close at 64.55, still down by 44 paise. It also breached the 102-mark against the British pound before closing at 100.6.
Subbarao in a separate media briefing said India has adequate forex reserves to meet the current situation.
Meanwhile, gold prices surged by Rs 625 to Rs 31,750 per 10 grams in New Delhi while 10-year bond yields fell to 8.23 percent from 8.41 percent.