Stocks, currency bounce back after Monday blues

Stocks, currency bounce back after Monday blues
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First Published: Tue, Apr 03 2007. 07 46 PM IST
Updated: Tue, Apr 03 2007. 07 46 PM IST
By livemint.com
New Delhi: The markets bounced back in the afternoon session on 3 April after plummeting in the previous session indicating that the punters at Dalal Street have shrugged off the gloom cast by the CRR and repo rate hikes announced by the RBI last week.
The benchmark BSE Sensex partially recovered on 3 April to close 169 points higher on revival of buying by funds along with short-covering by speculators in index-heavy stocks. It gained 115 points the morning session and consolidated the gain to 190 points before closing 169.21 points up, a net increase of 1.36%, to close at 12,624.58, largely due to a rebound in capital goods, PSU, IT and oil and gas sector stocks.
The index had recorded its second biggest fall of 617 points on 2 April in reaction to Reserve Bank’s move to squeeze liquidity.
The wide-based National Stock Exchange index Nifty gained 57.05 points, or 1.56%, to 3,690.65 after moving between 3,703.05 and 3,632.20 points.
Market observers said apart from revival of buying by funds, covering up of short positions by speculators also helped stocks to stage comeback.
They said firming Asian markets and overnight gains at US markets too influenced the trading here.
With renewed interest in PSU stocks led by BHEL, the PSU index was best performer among key indices and ended 122.30 points up at 5,796.78. The BSE capital goods index recovered 96.71 at 8,718.079, Oil and Gas index by 114.96 points at 6,287.21, while IT index rose by 94.41 points at 4,766.97.
The positive sentiment was even seen in the rupee market, with call monety rates remaining stable at 10-17% in the morning of 3 April. The rupee rallied sharply against the dollar as a result of a 0.5% hike in the CRR and 0.25% in the repo rate by the central bank.
In a bid to contain surging inflation, the RBI had hiked the key rates on 30 March to suck out Rs19,500 crore from the economy.
In brisk activity at the Interbank foreign exchange (forex) market, the rupee resumed strong at 43.26/28 a dollar from a close of 43.45/46 on 30 March and later surged to 43.05/06 in late morning deals.
Desite a plunge of 617 points in the benchmark sensex on 2 April, the rupee drew support from the central bank’s decision to raise key rates, which could trigger dollar selling by banks, forex dealers said.
The rupee had suffered a 1.7% fall, the worst one-day dip in 11 years to close at 43.74/76 a dollar following a suspected intervention by the central bank and hectic dollar coverings by banks on 29 March.
After that, the local currency bounced by 29 paise in the last session on heavy dollar sales by banks to tide over liquidity squeeze in the banking system.
With PTI
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First Published: Tue, Apr 03 2007. 07 46 PM IST
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