Sensex posts biggest 1-day gain in 4 years, rupee below 64/dollar

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The BSE Sensex surged over 700 points on Tuesday to mark the biggest 1-day gain since May 2009 as the rupee pulled back below 64  per dollar mark. The Nifty gained 216 points or 3.8 per cent as markets rallied for the fourth straight day.

The Sensex closed at 19,997, after earlier hitting 20,000 levels for the first time in over six weeks. The Nifty closed at 5,896.75, after earlier edging above the key 5,900 levels. The Nifty closed above the200 day moving average, considered to be a bullish signal by traders.

Traders were surprised by the speed with which markets have risen over the last four sessions. The Sensex has jumped around 1,800 points or about 9 per cent since Wednesday, when Raghuram Rajan took over as the Reserve Bank governor.

"The pace with which markets have gained is a little startling... 5,900 in four days... the time has come to take some profits," Anil Manghnani of Modern Shares and Traders told NDTV.

Tuesday's monster rally was driven by sustained recovery in the rupee and also on the back global cues.

Rupee:

The Indian rupee pulled back below 64 per dollar today, gaining around 6.5 per cent since Dr Rajan took over as the governor. Dr Rajan's announcements to defend the rupee have sparked badly-needed optimism among investors.

Gaurav Kapoor of RBS told NDTV that Dr Rajan has changed the thinking that central bank has a hands off approach to the rupee.

The rupee ended at 63.84 gaining 2.15 per cent against Friday's close at 65.24 per dollar. Narrowing trade deficit offered some respite for the troubled rupee. (Read: August trade deficit shrinks)

Narrowing trade deficit offered some respite for the troubled rupee. The rupee also tracked gains in the euro. The dollar weakened after disappointing US jobs data raised hopes that the Fed Reserve may be hesitant to announce tapering of stimulus as early as next week. (Read: 10 reasons why the rupee has jumped)

Global cues:

Favourable global factors also helped sentiments on the Street today. Asian stocks rose to a three-month high on Tuesday as investors turned their attention to more data out of China, while oil nursed heavy losses as fears of an imminent U.S. military strike against Syria receded even further.

A recent run of upbeat factory activity data from China, Europe and the United States further underlined that the global economy was on a firmer footing.

Stocks:
Traders also cited buying by foreign investors for the optimism. FIIs bought nearly Rs. 1,800 crore worth of cash shares in the previous two sessions. Shares in companies owned by foreign promoters rallied today after the RBI said on Friday it would allow non-residents to buy stocks of listed domestic firms through the foreign direct investment route.

The new rule would make it easier for foreign promoters, who were earlier able to raise their stakes only through separate processes such as open market offers, to buy shares in listed companies. ABB India jumped 17 per cent while Siemens closed with over 7 per cent gains.

Banking stocks extended gains on the back of rupee rally. The Bank Nifty closed 2.3 per cent higher and reclaimed the 10,000 mark.

Mayuresh Joshi of Angel Broking told NDTV that steps taken by Raghuram Rajan are not only aiding the Indian rupee, but also leading to a huge momentum in the Bank Nifty.

Auto stocks jumped around 6 per cent led by Tata Motors, which closed 10 per cent higher. Telecom stocks gained on regulators recommendations to cut spectrum prices. Bharti Airtel ended with around 8 per cent gains.

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