Markets post biggest monthly gain since July on falling crude, rising rupee

Markets completed their best month in four in November, on signs that foreign buying is increasing amid strengthening of the rupee and slipping of crude oil prices into bear territory.

The benchmark Sensex rose 5.1 per cent in November — its steepest monthly gain since July. It climbed 0.1 per cent to 36,194.30 on Friday. The Nifty rose 4.7 per cent in the month. Overseas investors bought net Indian shares worth $720 million through November 28 after three months of selling, according to data compiled by Bloomberg.

“The rupee appreciation and sharp fall in oil prices are substantially positive for the market as well as the economy. A falling rupee has further enhanced prospects of stronger capital flows,” said G Chokkalingam, managing director of Equinomics Research & Advisory.

The latest boost for markets has come in the form of a dovish stance taken by US Federal Reserve chairman Jerome Powell.

Powell on Wednesday signalled that the Fed may pause with the rate hike cycle as rates were “just below” neutral.  The comments triggered a rally in emerging market equities and currencies, while the US dollar weakened.

Domestic stocks and the rupee were already surging higher following a sharp decline in global crude oil prices, India’s biggest import item. Brent crude prices have come off by over 30 per cent in the past two months, helping India save billions of dollars in oil bills.

The Sensex and Nifty have rebounded nearly 8.5 per cent from their October lows. The indices, however, are still 7.5 per cent below their lifetime highs touched on August 29. 

The rupee, too, has gained more than 6 per cent from its lifetime low of 74.39 touched on October 9. Foreign institutional investors (FIIs) were net sellers to the tune of Rs 3.3 billion on Friday. Domestic investors bought shares worth nearly Rs 15 billion.

Most global markets were seen giving up gains, as investors turned cautious on account of the resurfacing of global trade tensions. Experts said investors were looking to the G20 summit and any move toward a resolution to the trade war.

The Sensex swung 306 points during intra-day trade on Friday, touching a high of 36,389 and a low of 36,083.

“The markets ended with a positive note after witnessing a roller coaster effect ahead of the G20 meet, and expectations of oil production cut in the upcoming OPEC meet. Fall in oil prices to bearish territory and appreciation of the rupee will stimulate economic growth,” said Vinod Nair, head of research, Geojit Financial Services.