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Our Bureau

Mumbai, Aug. 8 The tightening of ECB norms drove down the rupee, resuscitating software stocks that led a rally in the stock markets on Wednesday.

Bond prices fell by 57 paise and the yield on the 10-year paper rose by 10 basis points reacting to the bearish situation in the debt market.

The rupee opened weaker by 34 paise against the greenback, but regained a bit of lost ground to close at 40.52/53, 12 paise lower from the previous close of 40.41.

The rupee has been rising for the last two months on the back of strong FII inflows, hitting its nine-year high of 40.29 in July.

This had a dampening effect on software stocks, which however looked up on Wednesday as the situation seemed to reverse. IT companies are affected by currency movements as most of their revenue comes from exports to the US.

The BSE’s benchmark index, Sensex rose 375.21 points or 2.52 per cent to close at 15,307.98 on Monday. The broad-based S&P CNX Nifty of the NSE rose 2.43 per cent to close at 4,462.10 from its previous close of 4,356.35.

Information technology stocks led the rally in the markets, the BSE IT Index posting the highest gain during the day, rising over 4 per cent, to 4808.43.

Infosys Technologies was the top gainer for the day, rising 4.7 per cent to Rs 1967.60 on the BSE. TCS Ltd also gained by over 4 per cent to Rs 1,153.70.

The banking sector also took cheer from the announcement as companies would now have to look to domestic lenders to raise money. The BSE Bankex rose 1.86 per cent to 8076.32.

The market was also influenced by strong global cues as global markets recovered. Asian markets performed well as the US Federal Reserve said that the US economy remains sound, despite problems in its credit and sub-prime mortgage markets.

Foreign institutional investors, which are net sellers for the month, were net buyers to the tune of Rs 86.96 crore today, according to provisional figures on the NSE.

The Union Government in a directive released on Tuesday said that corporates can raise only up to $20 million for their requirements within India. If they are raising more than this amount, they must park it overseas, using it for their foreign currency expenditure.

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