Weekly Wrap: Sensex Extends Winning Spree And Rupee At 71
Indian equity benchmarks rose for the sixth week in a row, posting their longest stretch of gains since Jan. 28., as the global sentiment improved after the U.S.-Mexico trade deal.
The S&P BSE Sensex rose 1.03 percent to 38,645 and the NSE Nifty 50 index climbed 1.07 percent to 11,680.
The rally was led by IT heavyweights Infosys Ltd. and Tech Mahindra Ltd. after the rupee depreciated to a new low against the U.S. dollar. A weaker rupee augurs well for software services providers as they earn a sizeable chunk of their revenue in dollars.
On the flipside, Yes Bank Ltd. was the top Nifty loser. The stock fell over 8 percent after the Reserve Bank of India deferred approving another three-year term for Chief Executive Officer Rana Kapoor, while allowing him helm the bank for now.
“Global sentiment improved after the U.S.-Mexico trade talks that led to some amount of equity appreciation and India was a beneficiary of that,” market expert Ajay Bagga told BloombergQuint over the phone. Corporate earnings growth is getting factored in and led to an upgrade in earnings-per-share expectations for the next two years, adding the positive sentiment, Bagga said.
He, however, cautioned that there can be volatility next week as $200 billion worth of Chinese goods will see tariffs and domestic markets have not yet fully priced in the state and general elections.
All sector gauges barring the Nifty Media index ended higher. Nifty Metal index was the top gainer, up 4.66 percent, led by a rally in JSW Steel Ltd. as it will replace Lupin Ltd. in the benchmark 50-share gauge from Sep. 28. Information technology and pharmaceutical indices also rose over 3 percent each, tracking a weaker rupee.
Amid an emerging market currency rout, the Indian rupee hit a new low as rising crude oil prices threaten to put strain on the nation’s finances.
The local currency fell past 71 per dollar mark for the first time and clocked its biggest monthly drop in three years. For the week, rupee weakened 1.5 percent to 71.00 against the dollar.
Big Talking Points This Week
- 8.2% GDP growth cements India’s economic recovery.
- Warren Buffett prepares to sign into Vijay Shekhar Sharma’s Paytm.
- JSW steel to replace Lupin in Nifty 50 from Sept. 28.
- Trump says he's agreed on Mexico trade deal to replace Nafta.
- Trump warns of ‘bigger than ever’ war games if North Korea talks stall.
- FedEx’d diamonds fueled the Nirav Modi bank fraud, report says.
- U.S. Federal Reserve reaffirmed a gradual pace of policy tightening.