Sensex and Nifty Leap Higher Amid Geopolitical Turmoil; Rupee Strengthens Against Dollar
The Indian financial markets experienced a period of mixed stability as the rupee gained ground against the US dollar on Friday. The currency settled at 95.33 (provisional) after appreciating by 14 paise, driven partly by a weakening greenback and easing crude oil prices.Foreign Exchange Market Performance
The rupee traded in a volatile range during interbank forex markets, opening at 95.27 against the dollar. It fluctuated between 95.22 and 95.42 before settling provisionally at 95.33. This move contrasts with Thursday, when the Indian currency had appreciated by only 1 paisa to close at 95.47 against the US dollar.The dollar index, which measures the greenback’s strength against a basket of six currencies, was observed trading at 100.86, registering a slight decline of 0.04 per cent. Forex traders noted that while FII outflows and uncertainties stemming from fresh tensions in West Asia weighed heavily on the local unit, positive sentiment within domestic equity markets offered crucial support.
Equity Markets Surge Despite FX Volatility
Domestic stock indices showed robust strength despite global instability. The Sensex jumped by 827.57 points, or 1.08 per cent, closing at 77,569.39. Simultaneously, the Nifty witnessed a surge of 244.10 points, achieving a 1.02 per cent close and reaching 24,206.90.However, exchange data indicated that Foreign Institutional Investors (FIIs) offloaded equities worth Rs 532.86 crore on a net basis during Thursday's trading session. Despite this outflow, the positive momentum in equities managed to counterbalance some of the pressure seen in the currency markets.
Geopolitical Fallout and Currency Dynamics
The current market sentiment is heavily influenced by heightened tensions in West Asia. This unrest follows fresh airstrikes launched by the US against Iran early on Thursday. Tehran responded with reciprocal attacks targeting allied West Asian nations, threatening the stability of an interim peace deal.Commodity prices also offered a slight reprieve to markets. Brent crude, the global oil benchmark, was trading lower by 0.62 per cent at USD 75.83 per barrel in futures trade. Anil Kumar Bhansali of Finrex Treasury Advisors LLP noted that improved risk appetite and expectations for continued foreign portfolio inflows supported the rupee's stability.
Bhansali also pointed out that while the rupee saw a dip to 95.42 after an earlier gain, buying activity by oil companies and importers helped sustain the dollar's position in the market.
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