LM:Sensex surges 333 points, the most in Asia, as rupee gains on RBI measures
Mumbai: Indian equities surged the most in Asia on Wednesday as the rupee gained and the central bank eased curbs on foreign borrowings.
Reliance Industries Ltd, which has dollar-denominated debts of $16.5 billion, gained 2.32% after dropping the most in more than four years on Tuesday. Aluminium producer Hindalco Industries Ltd jumped 3.97%. ICICI Bank Ltd rallied 4.34%, the most in nine months.
The rupee gained 1%, erasing an earlier decline, on speculation the Reserve Bank of India (RBI) sold dollars.
The S&P BSE Sensex added 1.83%, or 332.89 points, to 18,567.55. The BSE Metal index rose 2.75% to be the biggest gainer, while the BSE realty index fell 0.41% to be the biggest loser.
Companies can borrow from foreign shareholders, the central bank said in a statement. Raghuram Rajan, a former International Monetary Fund chief economist who took over as the new RBI governor on Wednesday from D. Subbarao, will speak at a press conference in Mumbai after local markets close.
“Investors are anticipating Rajan may provide a new approach to solve the currency problem,” Aneesh Srivastava, who manages Rs.3,200 crore as chief investment officer at IDBI Federal Life Insurance Co., said by phone in Mumbai on Wednesday. “Foreign investors will have more faith in him, given his international acclaim and the IMF background.”
The rupee has weakened 12% this quarter, the worst performance among 24 developing-nation currencies tracked by Bloomberg, as the prospect of less US monetary stimulus and India’s record current-account gap prompted investors to pull out funds. The currency tops Rajan’s agenda, Arvind Virmani, a member of the RBI’s advisory panel on monetary policy, said by e-mail.
RBI intervention
The rupee climbed to 67.0550 per dollar at 2.58pm in Mumbai after falling as much as 1.3% to 68.62 earlier. The RBI likely intervened to prevent the rupee from dropping, according to two traders who did not want to be identified as the information isn’t public.
“Rajan, the top adviser in finance ministry since 2012, brings with him an authority that could usher in changes at the RBI and influence reforms both at financial regulators and in the finance ministry,” Virmani said.
The Sensex has lost 23% in dollar terms this year. The gauge is valued at 13.1 times projected 12-month earnings, compared with 14.3 times on 23 July, and has lost 5.1% this year in local currency terms.
International investors bought a net $76 million of Indian shares on 2 September, data from the regulator showed on Tuesday. That increased this year’s net inflow to $11.5 billion, the second-highest among 10 Asian markets tracked by Bloomberg.
The CNX Nifty on the National Stock Exchange gained 2.00%, or 106.65 points, to 5,448.10. India VIX, which measures the cost of protection against losses in the Nifty, fell 4.24%.
Bloomberg’s Jeanette Rodrigues and Anurag Joshi, and Mint’s Ravindra Sonavane contributed to this story.
