NEW DELHI: The S&P BSE Sensex
rallied over 700 points in trade on Tuesday to touch its key
psychological level of 20,000. Tracking the momentum, the 50-share
Nifty, which rallied for the fourth consecutive day in a row, surged
over 200 points to hit its key psychological level of 5,900 in trade
today. The rupee was at a two-week high following weakness in the dollar index. The partially convertible rupee was at 63.90 in late trade.
The 30-share index ended at 19,997.10, up 727.04 points or 3.77 per cent. It touched a high of 20,012.69 and a low of 19,444.66 in trade today.
The Nifty closed at 5,896.75, up 216.35 points or 3.81 per cent. It touched a high of 5,904.85 and a low of 5,738.20 in trade today.
Tracking the momentum, as much as 50 stocks hit their fresh 52-week highs in rallying markets today on the BSE. Stocks which rallied to their 52-week high include names like Tata MotorsBSE 10.12 % which rallied over 10 per cent; and pharma major Cipla.
As much as ten stocks hit their 52-week highs on the NSE as Nifty rallied towards its key psychological level of 5,900 for the first time since July 26. Stocks which rose to their 52-week highs on the NSE include CiplaBSE 0.34 %, HCL TechnologiesBSE 4.27 %, Four Soft BSE -1.72 %, Tata Motors, Alembic, etc.
We have collated five reasons which may have led 700-point rally in the market:
Upbeat Trade-Data: India's trade deficit for the month of August narrowed to $10.9 billion, versus $12.26 billion in July. The deficit narrowed on the back of improving exports and declining imports, and was down 11% month-on-month.
In the recent past, analysts have started emphasising more on trade data because it constitutes gold and oil import data which are top two constituents used in calculating the current account deficit (CAD).
Gold imports for FY14 till August were reported at $197.8 billion, a rise of 1.7% year-on-year. Gold imports declined significantly to $0.65 billion versus $2.2 billion month-on-month.
Given nearly 15 per cent drop in rupee so far in the year 2013, there are a few data points which can conclude that the macroeconomic slowdown and other headwinds are behind us.
"The one single data point that one should watch out for over the next 2-3 months is trade deficit. It would be interesting to see the trade deficit stay at current levels," said Manishi Raychaudhuri, MD & HoR, BNP Paribas BSE -3.96 % Securities in an interview with ET Now.
"Even if it moves up slightly to $13.5-14 billion per month, it would be satisfactory. This is because the low trade deficit numbers in June-July were supported by relative lack of economic activity and the non-wedding season," he added.
Rupee at two-week high: The rupee rallied to its two-week high as expectations for a narrower trade deficit and receding concerns about Syria helped the currency continue its recent recovery from record lows hit last month.
The rupee rose as much as 1.7 percent on the day, and looked set for a fourth consecutive session of gains after Raghuram Rajan announced key measures to stem rupee fall. However, the currency is still down nearly 15 per cent so far in the year 2013.
According to analysts, hopes of further measures from Raghuram Rajan will keep the momentum intact in the rupee.
"The currency appreciation that we have seen since last week, is essentially due to certain announcements after the new RBI governor took charge. However, the fundamental factors behind rupee fall continue to signal a weakening trend," said Dhananjay Sinha, Co- Head, Institutional Research- Economist & Strategist at Emkay Global Financial Services Ltd BSE 4.99 %.
Market participant see the rupee rising to 63 against the US dollar this week and is likely to trade in the range of 63-65.50, said a PTI report