MARKETS UNDER RAJAN KICK

 SENSEX SOARS 412 POINTS

The benchmark S&P BSE Sensex soared 412 points to a three-week high today after new RBI Governor Raghuram Rajan whetted the appetite of investors with a spate of measures including steps to boost the rupee and revive economic growth. The gains were led by banking, realty, consumer durable and PSU stocks, while information technology stocks declined. The rupee also gained on the back of Rajan's announcements and went up to 65.5 against the dollar in intra-day trade from yesterday's close of 67.07. The index opened 290 points higher than yesterday's close and gained as much as 550 points to the day's high of 19,117.52 before settling at 18,979.76, a rise of 412.21 points or 2.22 per cent. The Sensex was at the highest level since August 14, when it closed at 19,367.59. Yesterday, the Sensex had gained 333 points on investor optimism about the new RBI Governor. The National Stock Exchange index Nifty shot up 144.85 points, or 2.66 per cent to 5,592.95. The MCX-SX's SX-40 ended at 11,208.21, up 241.39 points. Soon after taking over as the 23rd Governor of the Reserve Bank of India, Rajan announced plans to revise and strengthen the monetary policy framework and liberalise the markets as well as curbs on investment and position-taking. He said steps would be taken to strengthen financial infrastructure and attract capital inflows and stressed the need for faster, broad based, inclusive growth. 18 Sensex shares advanced, led by State Bank of India (9.74 pc), ICICI Bank (9.2 pc), BHEL (8.2 pc), HDFC Bank (7.53 pc) and Coal India (7.02 pc). ICICI Bank, HDFC Bank and SBI together contributed about 245 points to the gains in the Sensex. The losers on the index included Sesa Goa, which dropped 4.26 pc, followed by TCS 3.37 pc, Infosys 3.32 pc, Wipro 2.74 pc and Gail India 1.54 pc. Among sectoral indices, S&P BSE-Bankex rose 9.3 pc, S&P BSE-Realty 5.41 pc, S&P BSE-Consumer Durables 4.54 pc, S&P BSE-PSU 4.5 pc and S&P BSE-Capital Goods 3.48 pc. The market breadth was positive as 1,487 stocks gained, 849 declined and 138 ruled steady. Total turnover improved to Rs 2,062.18 crore from Rs 1,938.81 crore yesterday.

Stocks of bank licence aspirants attract buying

Shares of companies that have applied for banking licence were in demand today, rising up to 7.6 per cent, after the Reserve Bank said it plans to issue new bank licences around January, "consistent with the highest standards of transparency and diligence." Bajaj Finance scrip surged 7.61 per cent, while Reliance Capital climbed 6.65 per cent and IDFC 6.19 per cent on the BSE. Among others, LIC Housing Finance rose by 5.49 per cent IFCI (5.70 per cent), Aditya Birla Nuvo (3.98 per cent) and India Infoline (2.54 per cent).
Raghuram Rajan, who yesterday took charge as the 23rd Governor of the central bank, said an external committee headed by former RBI Governor Bimal Jalan would be constituted to screen the 26 applications for bank licences.
"I hope to announce the licences within, or soon after, the term of Deputy Governor Anand Sinha who has been shepherding the process. His term expires January 2014," the RBI Governor said at his maiden press briefing soon after taking charge.

RUPEE CLIMBS BY 106 PAISE

The rupee appreciated further today, adding 106 paise to 66.01 against the dollar, after steps taken by new Reserve Bank of India Governor Raghuram Rajan to attract US currency inflows boosted market sentiment. To support the rupee, Rajan yesterday announced steps such as enhanced limits for exporters to re-book cancelled forward exchange contracts and a special concessional window to swap foreign currency non-resident (FCNR) deposits. The rupee started the day strong at 66 a dollar from the previous close of 67.07 at the interbank foreign exchange market and moved in a range of 65.54 to 66.52 before ending at 66.01, a rise of 106 paise or 1.58 per cent. Yesterday, it had risen 56 paise.

"Rupee benefitted with a slew of constructive announcements from the new RBI governor," said Anindya Banerjee, currency analyst at Kotak Securities. "However, the dollar bounced back as demand from importers surfaced."

Still, concerns remain about high inflation, growth slowdown, current account deficit and expectations of the US Federal Reserve easing its stimulus programme, said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "To stabilise the rupee, we need to focus more on export revenue and inward remittances. Until that happens, the central bank can intervene through borrowed funds, but we can't sustain that kind of stability," said Brahmbhatt. "The trading range for the spot USD-INR pair is expected to be within 65.50 to 67.00."