Domestic institutions pressed to shore up shares, save market from Rexit blues
The rupee, however, could not be saved of its morning blues entirely and ended 23 paise down at 67.31 against the dollar
Mumbai - Domestic institutional investors were seen shoring up shares on Monday with purchase worth over Rs 2,100 crore as foreign investors turned jittery with sales worth more than Rs 3,065 crore amid concerns over RBI Governor Raghuram Rajan's decision against a second term.
The Foreign Portfolio Investors (FPIs) remained net sellers with a net outflow of Rs 537.46 crore, after taking into account shares worth Rs 3,602.86 crore bought by them.
In contrast, the DIIs made a net purchase of Rs 724 crore after selling shares worth Rs 1,380 crore, as per the provisional data compiled by the stock exchanges.
While the final inflow and outflow data would be made public later by the depositories, the provisional figures showed a contrasting trend to the traditional pattern of foreign investors being net buyers on a day when the benchmark stock market indices like Sensex and Nifty close with gains.
FPIs are estimated to own over 20 percent shares of all the listed shares available for trading in the country, while the holding of DIIs is just about 7-8 percent. This ensures that the FPIs remain in a much stronger position to drive the movement of the Indian stock markets.
Marketmen said that some big domestic institutions could have been pressed into hectic buying to counter selling by foreign investors on concerns relating to Rajan.
They also pointed out that turnover was relatively higher in early morning trades for a Monday.
Stocks and the rupee on Monday opened with an early morning plunge but equities bounced back to score a 241-point rally as Rexit jitters got blunted by a new wave of FDI reforms, hectic buying by institutions, talking-up by influential market men and easing Brexit worries.
The rupee, however, could not be saved of its morning blues entirely and ended 23 paise down at 67.31 against the dollar, although intervention by the RBI in the forex markets helped its partly recoup the losses. The Indian currency had plunged almost one per cent or 61 paise to a low of Rs 67.69.
The RBI bought the government's securities worth Rs 10,000 crore through OMO purchase auction held today, while the total amount offered by participants stood at Rs 45,922 crore.
There have been concerns about a sharp plunge in stock and rupee valuations after Rajan made a surprise announcement over weekend that he would not take a second term at RBI.
Stock market benchmark Sensex plunged to as low as 26,438 points in pre-open trade between 0900-0915 hours, down nearly 200 points from its previous close, but early morning buying orders helped limit the opening loss at 178 points.
After touching a low of 26,447.88 in opening trade, the Sensex recovered sharply to scale an intra-day high of 26,885.49 points before finishing at 26,866.92, showing a gain of 241.01 points or 0.91 per cent.
Nifty closed 68.30 points or 0.84 per cent up at 8,238.50.
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The price action on Monday is crucial for the rupee and equity markets. It will show if the markets are ready to a break or are ready for another correction to the downtrend.
Unless the Sensex closes below 15,500, the markets will not have a meltdown. A close below that could take the index to the 13,250 level.
Citi sees the rupee hitting 69.60 in 6-7 weeks, while CLSA seed the currency at 67 in a year's time