Sensex Surges Over 400 Points As Concerns On RBI-Government Rift Ease

Domestic stock markets swung between gains and losses on Wednesday as caution prevailed as the rupee fell on speculation that the central bank governor might resign due to a widening rift with the government. Gains were led by financial services, IT and pharma shares while losses in metal and auto stocks kept the upside in check. At 2:34 pm, the S&P BSE Sensex was trading at 34,332.36, up 441.23 points, or 1.30 per cent, and NSE benchmark Nifty50 was at 10,343.45, up 144.65 points or 1.42 per cent. Thirty-five stocks on the index advanced while 15 declined. Advances were led by Indiabulls Housing Finance, Tech Mahindra, HDFC, HCL Technologies and Infosys.

"The RBI and the government sitting face to face and discussing the issues is positive for the markets," AK Prabhakar, head of research, IDBI Capital Markets, told NDTV.  

Reserve Bank of India Governor Urjit Patel may consider resigning from his post given a breakdown in relations with the government, news agency Reuters reported citing TV channels. That sparked a selloff in the rupee and bonds, the agency noted.

The rupee breached the 74-mark against the dollar again, dropping 43 paise to hit an intraday low of 74.11. Fresh weakness in the rupee against the greenback boosted IT stocks, as depreciation in the currency makes exports more attractive.

The Nifty IT, a sectoral index on NSE, gained 2.55 per cent. Tech Mahindra rose as much as seven per cent after reporting 27.3 per cent jump in second-quarter net profit to Rs. 1,064 crore.

On Tuesday, Sensex had shed 176 points, or 0.5 per cent, to close at 33,891, and the Nifty settled  at 10,198.40.

Investors awaited quarterly earnings reports from large-cap companies such as Lupin, Vedanta, Tata Motors and Larsen & Toubro, due later today.

Fund outflows continued to put pressure on the markets. Foreign portfolio investors (FPIs) net sold equities worth Rs 1,592.02 crore while net purchase by domestic institutional investors stood at Rs. 1,363.04 crore on Tuesday, according to provisional data from the NSE.

In the global markets, MSCI's broadest index of Asia-Pacific shares outside Japan added 0.75 per cent, but it was still on track to fall roughly 11 per cent this month.

(With agency inputs)