Rupee remains range-bound as PSU banks buy dollars sold by foreign banks

Mumbai: The rupee was stuck in a narrow range on Monday as dollars sold by foreign banks likely on behalf of their clients were absorbed by public sector banks. After opening at 60.05 per dollar, the Indian currency was trading 60.07, up just 0.03% from Friday’s close of 60.09. It has moved in the 59.99-60.12 range on Monday. “There are inflows in the market, but the rupee has not been allowed to move much because public sector banks are buying dollars. We are not sure of what their intention is because they have been buying since the last one week,” said a dealer with a private bank. Besides the local spot market dollar demand from public sector banks was also seen in the non-deliverable forward market, according to data from Bloomberg, which pushed the dollar higher in that market as well. As a result, the one-month forward dollar rupee was trading at 60.38, up 0.15% from Friday’s close, while three-month forward was trading at 60.97, up 0.23%. Six-month non-deliverable forward was at 61.95, up 0.10% from Friday’s close. However, dollar inflows from foreign institutional investors (FIIs) continued in the equity market. Benchmark 30-share S&P BSE Sensex was trading at 25,371.79 points on BSE, up 1.08%. Since the beginning of this year, the rupee has gained 2.88% against the dollar, while FIIs have bought $9.88 billion from local equity markets. The yield on India’s 10-year benchmark bond was at 8.717%, compared with its Friday’s close of 8.745%. Bond yields and prices move in opposite directions. The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.021, down 0.02% from its the previous close of 80.039.

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LME inventories: Copper -850, Aluminium -6550, Nickel +234, Lead +1500, Zinc +1300, Tin +100

Sensex, Nifty Turn Flat; TCS, Sun Pharma Hit Year Highs

BSE Sensex and Nifty pared gains in afternoon trade, with selling in banking and metal stocks offsetting gain in pharma and IT stocks.

An easing of global oil prices and gains in healthcare and IT stocks had helped Sensex, Nifty rebound nearly 0.6 per cent at day's high.

In oil, Brent crude was down 0.6 percent at $113.28 a barrel amid some easing of concerns of a supply disruption from the conflict in Iraq. Rupee was marginally higher at 60.12 per dollar vs yesterday's close of 60.14.

Among gainers, Ranbaxy Laboratories rose as much as 8 per cent after the US Food and Drug Administration said on Thursday it had approved the company's generic version of Novartis AG's blood pressure drug Diovan. Analysts say the current market size of Diovan in the United States is $1.7 billion and Ranbaxy can generate revenue of over $200 million from generic Diovan sales as it enjoys 180 days exclusivity for the same.

Also, Sun Pharmaceutical Industries, which in April agreed to buy Ranbaxy, rose 4 per cent to a year high of 674.95 on hopes that drugs such as Diovan would reduce its effective cost of acquiring Ranbaxy.

IT stocks were also in the limelight after Accenture reported a better-than-expected 7.5 per cent rise in quarterly net revenue. TCS rose nearly 4 per cent to a new year high of 2,398 while Infosys, Tech Mahindra and Wipro advanced between 1.5-3 per cent.

GAIL shares fell nearly 1.5 per cent following a blast at a gas pipeline of the state-owned energy company in Andhra Pradesh.

Selling pressure was seen in metal stocks with Hindalco down over 2 per cent and Sesa Sterlite losing 1 per cent. Banking stocks also fell with ICICI Bank fell 1.5 per cent while SBI and PNB fell 0.7 per cent.

At 12:38 p.m., the Sensex was up down 5 points at 25,057 while Nifty was slightly lower at 7,487.