MUMBAI: After the ‘Trump effect’ on oil markets that brought cheer to India as a leading importer of crude oil, it was the turn of Federal Reserve Chairman Jerome Powell’s turn to buoy Indian markets across the board on Thursday. Powell’s comment that the US benchmark interest rate is near neutral was interpreted as a dovish stand, ruling out immediate rate hike by the US, a matter of relief to emerging markets. The result was a weakened dollar against strengthened currencies, including rupee.
“Nifty opened higher on back of strong global cues as the Fed signals (that) rate hikes may be ending, strong rupee trading below 70 mark, and bond yields at six months-low, lifted the interest rate sensitive sectors with sharp gains to the tune of 2 per cent,” said B Gopakumar, ED & CEO, Reliance Securities.
Indian rupee breached the 70-to-a-dollar level after three months and reached a day’s high of 69.78 and closed at 69.85, rising 77 paise over close. Rupee’s retreat from the threatening lows of near 74 has been clearly aided by the lows the global crude oil prices have hit during the recent weeks, after oil supplies increased and fears of disruption following Iran sanctions vanished. Broadly, every $1 drop per barrel of crude saves India approximately $850-900 million, tweeted Sanjeev Sanyal, principal economic adviser to the government.
All eyes are on the G-20 summit this week, when major oil producers are expected to bring a curtain raiser before next week’s OPEC meet. While some reports suggested that Russia is fine with $60/b, the market is still looking for a clear message on OPEC’s decision on cutting oil production to boost prices.
Among emerging markets, India is seeing an upgrade. Sensex reclaimed 36,000 to close at 36,170.41, up 453.46 points or 1.27 per cent. Nifty crossed the important 10,850 market to close 129.85 points or 1.21 per cent higher at 10,858.70.