Stocks stage relief rally after rupee rebound

The domestic currency, which had hit six and a half months low yesterday, managed to overcome its weakness after the dollar weakened globally.

Since it was the last session for September futures and options (F&O) contracts, speculators hit the ground running by covering their short bets towards the close, which accelerated the pace of recovery.

The Sensex quickly slipped into negative territory as foreign funds continued to pull out capital, but emergence of value-buying made sure the gauge settled higher by 122.67 points, or 0.39 per cent, at 31,282.48.

The 50-share NSE Nifty ended up 33.20 points, or 0.34 per cent, at 9,768.95.

"Marginal rebound in rupee and short covering ahead of expiry helped the market to close positive, while the caution on economic slowdown remains. Gradual rise in crude price and muted expectation from RBIs upcoming monetary policy influenced investors to stay on the side-line," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

The 30-scrip BSE index had stretched its last 7-day fall to 1,263.95 points, bogged down by concerns over foreign outflows and the travails of the rupee.

There was a mixed trend in Asia at the close with a higher opening in Europe.

US stocks were back in the recovery mode following sweeping tax reforms plan unveiled by President Donald Trump.

But fault lines remained over North Korea's ballistic and nuclear programme, which kept risk sentiment in check.

Kotak Bank was the smartest of the Sensex lot, surging 3.05 per cent. Dr Reddy's firmed up 2.62 per cent to Rs 2,367.85 after the company said it has received an establishment inspection report (EIR).

Losses in Asian Paints, Reliance Industries, Wipro and Bharti Airtel, however, squeezed the upside.

The BSE realty took the pole position among sectoral indices, gaining the most by 0.91 per cent, followed by banking and healthcare.

A similar pattern showed up in broader markets, where the small-cap and mid-cap indices rose by up to 0.90 per cent.

There were no signs of change in trading preference of foreign portfolio investors who net sold shares worth Rs 856.28 crore. Domestic institutional investors (DIIs) picked up equities worth a net Rs 1,858.29 crore yesterday, according to provision data.