Mumbai: The Indian rupee overcame a shaky stock market and nudged higher on Monday, powered by foreign demand for a large initial public offering by state utility NHPC Ltd.
The partially convertible rupee closed at 47.82/83 per dollar, marginally above its previous close of 47.85/86. The rupee traded in a wide band of 47.64 to 47.89 during the session.
NHPC’s IPO for up to $1.25 billion was subscribed 3.5 times on the first day on Friday. The offering closes on Wednesday. Adani Power’s $630 million IPO was subscribed more than 20 times when it closed on 31 July.
Naveen Raghuvanshi, associate vice president at Development Credit Bank, said the IPO inflows helped the rupee after it swung in tandem with the choppy stock market and cross currencies.
“Inflows from NHPC were there and are likely to continue until its closure,” he said.
Indian companies have raised more than $8.5 billion in share sales so far this year, already surpassing the total for 2008.
Foreigners have purchased a net $7.3 billion worth of domestic shares this year, after dumping more than $13 billion in 2008. These inflows have helped the rupee climb back from its record low of 52.2 touched in early March.
“There was some dollar demand from oil companies as crude prices were lower today, but no other major demand was seen. The rupee should trade in 47.60 to 48 band this week, but we’ll also have to watch out for important data,” Raghuvanshi said.
Oil is India’s main import and refiners are the largest buyers of dollars in the local currency market. Oil prices slipped on Monday losing momentum after last week’s rally as traders focused on swollen inventories and prospects for a stronger dollar.
Indian shares fell 1% to their worst close in more than three weeks on fears a nascent economic revival would be scuppered by poor rains, which are key to the country’s domestic-demand-led economy.
“Industrial output data will be closely watched. The market expects the data to be bad, so any positive news will help the rupee,” Raghuvanshi said.
Factory output had risen for two successive months to May. The data for June is due on Wednesday at 0630 GMT.
One-month offshore non-deliverable forward contracts were quoting at 47.82/92, in line with the onshore spot rate.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at 47.87 and 47.8750 respectively, with the total traded volume on the two exchanges at a high $1.7 billion.