Rupee gains for a fifth day

The rupee gained for a fifth day, its longest winning streak in eight weeks, after a report predicted the nation’s benchmark stock index would advance.

Indian stocks climbed for a second day after Morgan Stanley said in a research note released yesterday that equities would rally 19 per cent by the end of the year. Overseas investors bought $26 million more Indian shares than they sold on May 30, exchange data show. “There have been some inflows” into stocks, said J. Moses Harding, a Mumbai-based executive vice president at IndusInd Bank Ltd. “The currency’s strong track record of appreciation in recent years would help attract investors.”

 

The rupee strengthened 0.5 per cent to 44.84 per dollar at close in Mumbai, according to data compiled by Bloomberg. It reached 44.77 earlier, the strongest level since May 12. The currency advanced in each except one of the last five years.

The Bombay Stock Exchange’s Sensitive Index will climb to 22,100 by year-end due to attractive valuations, Morgan Stanley analysts led by Mumbai-based India Managing Director Ridham Desai wrote in the report. The index advanced 0.6 per cent to 18,608.81 on Wednesday.

Offshore forwards indicate the rupee would trade at 45.46 to the dollar in three months, compared with expectations of 45.65 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

BONDS RISE
Government securities shot up further on continued heavy buying by banks and companies. The 7.80 per cent government security maturing in 2021 rallied to Rs 96.50 from Rs 95.95, while its yield dipped to 8.32 per cent from 8.41 per cent yesterday. The 8.08 per cent government security maturing in 2022 also improved to Rs 97.40 from Rs 96.95 previously, while its yield dropped to 8.44 per cent from 8.51 per cent.

The 8.13 per cent government security maturing in 2022 gained at Rs 97.60 from Rs 97.29, while its yield declined to 8.46 per cent from 8.51 per cent. The 7.83 per cent government security maturing in 2018, the 7.59 per cent maturing in 2016 and the 7.17 per cent maturing in 2015 finished higher at Rs 96.90, Rs 96.61 and Rs 95.79, respectively.

CALL RATE RECOVERS
The call rate remained firm on the call money market on Wednesday on shortage of funds in the system. The overnight call money rate moved in a range of 7.40 per cent and 7.25 per cent before settling up at 7.40 per cent from 7.25 per cent yesterday.