Recovering from a near-ten-month high of 59.53 against the dollar, the rupee fell slightly on Monday to end at 60.05 on the back of likely heavy dollar buying by the central bank ahead of exit polls rally.

The unit opened flat at 60.03 amid low volume trading in the morning session. However, the Indian rupee sharply appreciated at the domestic equity market Bombay Stock Exchange zoomed over 500 points breaching the 23,000 levels one expectation of exit polls of national election results favouring a Narendra Modi-led NDA government at the centre.

"The rupee appreciated because of the expectation of a market favourable election result projecting a comfortable majority enabling a stronger government. Also, the RBI will continue to take steps to contain the pressure towards sharp appreciation," said Ashish Parthasarthy, Head Treasury, HDFC Bank. According to him, if the outcome resembles the exit poll results, the rupee may strengthen to 57.58 per dollar.

BSE ended at 23,551 points surging 556.77 points (2.42 per cent), while NSE’s Nifty also rallied by 155 points (2.27 per cent) to close above 7,000 levels at 7,014 points. The final results of the polls will be declared on Friday.

Call rates and G-Secs

The overnight call money rate (the rate at which banks borrow money from each other to overcome short-term liquidity mismatches) ended higher at 8.95 per cent from its previous close of 8.70 per cent on Friday.

The yield on 10-year benchmark 8.83 per cent bond, maturing in 2023, softened a tad to 8.72 per cent from Friday’s close of 8.74 per cent. Bond prices rose to Rs 100.65 from last week’s close of Rs 100.53. Bond yields and prices move in opposite directions.

(This article was published on May 12, 2014)
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