Rupee surges 49 paise against US dollar on Modi's landslide win
Investor wealth rises Rs 2.53 lakh cr
Mumbai, May 24 : The Indian rupee Friday rallied 49 paise to close at 69.53 against the US dollar in line with a massive surge in domestic equities following a decisive mandate for Narendra Modi's BJP in the general elections.
On weekly basis, the Indian currency gained 70 paise helped by a host of domestic and global factors like stable political outlook with NDA government's return, sustained fund inflows, lower crude oil prices and strengthening Asian currencies.
However, concerns over ongoing US-China trade tariff tussle continued to hurt forex market sentiment.
At the interbank foreign exchange, the rupee opened at 69.75 against the previous close of 70.02. It traded in the range of 69.81 to 69.50 during the day. The Indian unit finally settled the day at 69.53, gaining 49 paise or 0.70 per cent.
Foreign institutional investors (FIIs) remained net buyers in the capital markets on Friday, buying shares worth 2,026.33 crore, according to exchange data.
"India's rupee led gains in Asian currencies as oil prices fell and equity markets surge. Sentiments have improved in domestic equity markets after continuity of the stable government. Firm equity markets would attract dollar inflow and rupee therefore would get support," V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities, said.
The Bharatiya Janata Party (BJP) has won over 300 seats on its own out of 542 seats in the Lok Sabha elections -- a first back-to-back majority for a single party since 1984.
Riding a wave of optimism, the BSE Sensex shot up 623.33 points, or 1.61 per cent, to end at 39,434.72, while the broader NSE Nifty surged 187.05 points, or 1.60 per cent, to 11,844.10.
Bond prices advanced for a third day as a retreat in oil eases concern about inflation which will give central bank comfort to cut interest rate and infuse liquidity in economy, he said.
The benchmark 10-year government bonds yield dropped 0.15 per cent to 7.23 per cent on Friday.
Meanwhile, international oil benchmark Brent Futures rose 1.18 per cent to USD 68.56 a barrel on Friday.
The weaker oil prices help currencies of major net importers of the commodity, such as India and China.
According to forex market experts, key factors that will drive investor sentiment going ahead are movement of crude, developments on trade tariff front between the US and China and the next month's RBI policy meet.
Meanwhile, investor wealth zoomed Rs 2.53 lakh crore on Friday as the Sensex shot up over 623 points after a decisive mandate for the Modi-led BJP.
The BSE benchmark closed at 39,434.72, up 623.33 points or 1.61 per cent. During the day, it jumped 665.58 points to 39,476.97.
Led by the rally in equities, the market capitalisation of BSE-listed companies rose by Rs 2,53,830.19 crore to Rs 1,52,71,407.47 crore.
The Bharatiya Janata Party (BJP) has won over 300 seats on its own out of 542 seats in the Lok Sabha elections.
"With the decisive mandate, we expect policy continuity and look forward to next generation of reforms, which will take the Indian economy to the next phase of accelerated growth. The mandate augurs well for an environment of positivity for equity and could trigger a movement from merely a narrow market performance to a broad-based rally involving mid- and small-cap stocks.
"In this environment, we expect domestic cyclicals which include industrials and financials to outperform," said Vijay Chandok, managing director and chief executive officer, ICICI Securities.
From the 30-share pack, 26 companies closed the day with gains led by ICICI Bank, Larsen and Toubro, Bharti Airtel, Vedanta and Tata Motors rising up to 5 per cent.
All 19 BSE sectoral indices traded in the green, led by realty, capital goods, industrials, telecom and automobiles -- gaining as much as 4.25 per cent.
In the broader market, the BSE Smallcap index soared 2.43 per cent and Midcap climbed 2.09 per cent.
On the BSE, 1,833 scrips advanced, while 699 declined and 148 remained unchanged.
"With the election event now behind, the focus now shifts back to business -- muted, weak on risk appetite and earnings, and we anticipate moderate market returns (3 per cent-plus till June 2020) over the year given high valuations," according to a report by Edelweiss Research.