Sensex zooms 305 pts on value-buying after two-day meltdown; rupee rebounds

Reversing a two-day meltdown, equity indices staged a smart pullback on Wednesday as investors scooped up the recently hammered FMCG, metal, and capital goods stocks, amid a recovery in the rupee.

The sentiment was strengthened after the government said steps will be taken to ensure the rupee does not depreciate to an “unreasonable levels,” amid reports that Prime Minister Narendra Modi will take stock of the economic situation over the weekend. 

The BSE Sensex, which opened in the green, surged in afternoon trade to finish higher by 304.83 points at 37,717.96. The NSE Nifty also jumped 82.40 points to end at 11,369.90.

The rupee rebounded from its historic low of 72.91 (intra-day) against the dollar to 71.86 in afternoon trade, while data showed that India’s exports grew 19.21 per cent to $27.84 billion in August.

The 30-share BSE Sensex, after a positive opening at 37,546.42, advanced to the day's high of 37,752.58 on a flurry of buying by domestic institutional investors (DIIs) and retail investors.

Intra-day, the benchmark had slipped in the negative zone to hit a low of 37,342. The gauge had plunged about 977 points in the previous two sessions as global trade war tensions had rattled investor optimism.

Brent crude oil prices also eased to some extent after breaching the $79-a-barrel mark. Buying activity picked up ahead of the release of Index of Industrial Production (IIP) and inflation data, as domestic investors accumulated recently-battered stocks amid higher openings in European markets.

Most other Asian markets extended losses for the sixth straight session as investors fear an escalation in the China-US trade conflict.

Meanwhile, DIIs bought shares worth Rs 7.5 billion, while foreign portfolio investors (FPIs) sold equities worth Rs 14.54 billion on a net basis Tuesday, provisional data showed. Stock exchanges will remain shut on Thursday on account of ‘Ganesh Chaturthi’.

“The market turned positive, supported by a recovery in the rupee from an all-time low and rebound in consumer stocks after a nosedive correction. Global triggers are not very supportive as trade tension remains a key catalyst, while outflow of foreign funds in expectation of a rate hike by the US Fed is impacting sentiment. Any government intervention to contain the current account deficit and measures on the rupee will provide impetus to the market,” said Vinod Nair, head (research), Geojit Financial Services.