Indian benchmark share indices closed higher yesterday led by gains in index heavyweights HDFC twins, Asian Paints and Axis Bank. Rally in global markets also boosted the investor sentiment.
The Sensex closed at 38,434.72 points, up 214.33 points or 0.56%, while Nifty added 59.40 points or 0.53% to end at 11,371.60.
NTPC, closing 5% higher, was the top Sensex gainer, followed by Power Grid, Asian Paints, HDFC Bank and Sun Pharma. Bharti Airtel, ONGC, Tata Steel, HCL Tech and RIL were among the laggards. Of 30 Sensex shares 11 closed in the red.
Meanwhile the rupee settled 18 paise higher at 74.84 (provisional) against the US dollar yesterday as heavy buying in domestic equities strengthened investor sentiments. At the interbank forex market, the domestic unit closed at 74.84, registering a gain of 18 paise over its previous close of 75.02 against the greenback.
During the session, the local unit witnessed an intra-day high of 74.84 and a low of 74.96 against the US dollar.
Forex traders said positive trend in the equity markets and easing crude oil prices supported the rupee.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.17% to 92.95.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 268.46 crore on Thursday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 0.29% to $44.77 per barrel.
Meanwhile sovereign bonds in India fell to a three-month low after investors demanded higher yields at a weekly debt sale and as minutes of the central bank’s interest rate meeting showed members have turned more hawkish.
The yield on the benchmark 10-year debt rose 14 basis points to 6.09%, the highest since early May. Yield on the most traded 6.19% 2034 bond, a paper auctioned yesterday, was up 15 basis points at the close.
The central bank sold the 2050 bond, the longest-maturity debt, at a cutoff yield of 6.7596% as against 6.65% estimated in a Bloomberg survey of five traders.
The 2034 bond was sold at a yield of 6.4071% versus an estimated 6.38%. The RBI accepted Rs20bn extra in the 2034 sale.
“Higher cutoffs at today’s bond auction indicates that the RBI is fine with higher yields, that kind of unnerved the market,” said Naveen Ramnani, a fixed-income trader at UCO Bank in Mumbai.
Bonds will come under more pressure if there is no support from the RBI given the huge supply overhang, he said.
A sale of the benchmark 10-year debt had to be rescued by underwriters last week.
The central bank is yet to signal whether it will buy more bonds to help ease a record Rs12tn supply in the fiscal year.
The weak demand at the auction comes after minutes of the RBI’s policy meeting published on Thursday showed rate panellists fretted over a recent surge in consumer inflation, preferring to wait for price pressures to wane before considering more steps to address the “deepest contraction in history.”
The RBI may be at the end of the rate-cut cycle “and expectations of large cuts must be anchored as inflation is unlikely to materially decline from the current levels,” Soumya Kanti Ghosh, group chief economic adviser at State Bank of India, wrote in a note. “It would better serve the financial markets if RBI continues to resort to unconventional policy measures.”
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