Benchmark indices soared around 2 per cent on Friday on the back of RBI increasing the repo rate by 50 basis points to 5.9 per cent.
Sensex gained around 1,000 points to close at 57,426. Nifty regained its 17,000-mark to close at 17,094, a gain of around 275. The rupee appreciated 52 paise due to reports that the RBI may encourage overseas branches of Indian banks to offer dollar-denominated loans to domestic oil marketing companies to meet their crude oil payments.
Such a move could shift the OMCs’ demand for Dollars from domestic forex market to the overseas market. This, in turn, can partly stall the depreciating trend in the rupee, said a chief forex dealer with a private sector bank. The Indian currency closed at 81.34 per dollar against the previous close of 81.86.
Yields in the Government Securities market rose, with yield of the widely traded 10-year G-Sec (coupon rate: 6.54 per cent) rising about 5 bps and price declining 32 paise as the market had already factored in the 50 bps repo rate hike.