The Indian rupee rebounded on January 7, appreciating 11 paise to 71.83 against the US dollar, following recovery in the crude oil prices and a positive trend in equity markets.
The Nifty50 rallied more than 100 points on January 7 recovering almost 50 percent of 233-point fall witnessed on January 6 that pushed the index below 12,000. The S&P BSE Sensex also witnessed a bounce-back of more than 400 points.
But there was some profit booking in afternoon as benchmark indices wiped out half of gains to close off day's high. The BSE Sensex rose 192.84 points to close at 40,869.47 and the Nifty50 climbed 60 points to end at 12,053.
Sectorally, action was seen in metals, infrastructure, energy, banks, power, as well as capital goods index.
We have collated 4 factors which could be contributing to the rise seen in equity markets:
Stable global markets:
Overnight, US market closed higher while Asian markets rebounded as a day passed without a new escalation in the Middle East.
Japan's Nikkei rallied 1.6 percent and South Korea's Kospi was up 0.95 percent while China's Shanghai Composite rose 0.7 percent and Hong Kong's Hang Seng gained 0.34 percent.Pentagon says will not break law of war:
US Defense Secretary Mark Esper strongly suggested on Monday that the US military would not violate the laws of armed conflict by striking Iranian cultural sites, a move threatened by President Donald Trump, said a Reuters report.
Targeting cultural sites with military action is considered a war crime under international law, including a UN Security Council resolution supported by the Trump administration in 2017 and the 1954 Hague Convention for the Protection of Cultural Property, it said.Stability in crude oil:
Crude Oil steadied after breaching $70/bbl on the upside in Monday’s trading session which is good news for oil-importing countries like India.
Any increase in the price of crude oil is always going to be a cause of concern for India considering it imports more than 80 percent of oil requirements.
According to the CARE Rating report, in the current financial year, India has imported 4.5 mb/d (April-November) of crude oil and the import dependency based on consumption which has increased to 84.5 percent compared with it being 83.3 percent a year ago in the same period.
Brent crude futures trading $68 a barrel, after soaring to a high of $70.74 a barrel from Friday’s settlement.
Oil prices steadied on Monday after Brent touched above $70 a barrel on rhetoric from the United States, Iran and Iraq that fanned tensions in the Middle East after a U.S. air strike killed a top Iranian military commander, said a Reuters report.Rupee registers biggest single-day gain in a month:
The Indian rupee rebounded on January 7, appreciating 11 paise to 71.83 against the US dollar, following recovery in the crude oil prices and a positive trend in equity markets.The rupee on January 6 had plunged 13 paise to settle at 71.93 against the US currency, mainly weighed down by the spike in global crude oil prices as escalating US-Iran tensions fanned fresh fears of conflict in the Middle East.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.