Employees work at their desks in a brokerage firm in Mumbai. The Sensex closed up 0.7% to a record closing high of 24,858.59 points, surpassing its previous milestone set on May 26.
Reuters
Indian shares rose yesterday to a record closing high as metal stocks such as Tata Steel surged after surveys showed China’s factory and services sectors had their best performance in months, while the central bank held rates steady and toned down its inflation rhetoric.
China’s factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed yesterday, adding to signs the economy may be stabilising.
Sentiment was also supported after the Reserve Bank of India eased rules to spur bank lending and toned down its inflation rhetoric in moves set to be welcomed by a new pro-business government determined to revive economic growth.
“I am hopeful that we may see a rate cut soon provided the government’s administrative actions finally succeed in reducing food inflation,” said Motilal Oswal, chairman and managing director at Motilal Oswal Financial Services.
The benchmark BSE index rose 0.7% to a record closing high of 24,858.59, surpassing its previous milestone set on May 26. The broader NSE index gained 0.7% a record closing high of 7,415.85, surpassing its previous record hit on May 23.
Steel shares gained after surveys showed China’s factory and services sectors had their best showings in months in May.
Tata Steel rose 6.9%, Steel Authority of India gained 4.3%, and JSW Steel rose 4%.
Among other metal stocks, Sesa Sterlite surged 6.4%.
Cement stocks also gained on value buying. ACC rose 2.5% and Ambuja Cement ended up 3.7%.
Sugar refiners rose sharply on expectations that the new government would push ethanol blending in petrol and increase the import duty on the sweetener to support local prices, several traders said. Bajaj Hindusthan rose 10%, Dhampur Sugar Mills advanced 10.8%, Shree Renuka
Sugars gained 10.7%, and Balrampur Chini Mills ended up 7.8%. Zee Entertainment Enterprises gained 2.3% after the RBI on Monday said foreign institutional investors can purchase up to 100% of stake in the company, up from the earlier limit of 49%.
However, bank shares ended mixed after the central bank kept its key policy rate steady and toned down its inflation rhetoric, while cutting the amount of bonds lenders must set aside with the RBI. HDFC Bank rose 0.5%, while Kotak Mahindra Bank ended down 1.5%.
Rupee hits near 3-week low; RBI, importers buy dollars
The Indian rupee hit a near three-week low and weakened for a fourth consecutive session yesterday as the central bank was spotted buying dollars to curb gains in the currency while importers’ buying also added to the losses.
The rupee had briefly strengthened early in the day when the Reserve Bank of India kept interest rates steady and signalled it may be done with rate hikes.
The ensuing optimism about growth helped offset some of the expected benefits from higher interest rates on the rupee.
Traders expect the rupee to remain in a range until the government unveils its budget, likely in early or mid-July.
“INR looks rangebound for now since capital flows and current accounts are well balanced. One needs to watch global risk appetite very closely,” said Samir Lodha, managing director at QuantArt Market Solutions, adding that he expects the pair to be in a range of 58.50 to 60.0 until the Budget next month.
The partially convertible rupee closed at 59.3850/3950 per dollar after falling as low as 59.42, a level last seen on May 15.
The pair had closed at 59.1525/1625 on Monday.
The rupee fell even though local shares rose to a record close as metal firms surged after surveys showed China’s factory and services sectors had their best performance in months.
Traders cited little impact from the central bank’s move to allow banks to equally spread out additional provisioning on unhedged foreign currency exposure in the current fiscal year.
In the offshore non-deliverable forwards, the one-month contract was at 59.70 while the three-month was at 60.28.