Stock markets continued to break records but the rupee slouched off towards 83.60-levels against the dollar on Monday.
The benchmark indices settled at fresh peaks in a rally led by PSU banks on expectations of reform measures in the budget.
The rupee, however, lost six paise to close at 83.59, weighed down by the overall strength of the American currency in the overseas market amid an assassination attempt on Presidential candidate Donald Trump.
The Sensex ended with gains of 145.52 points at 80,664.86 after jumping 343.2 points to hit the day’s high of 80862.54.
The Nifty advanced 84.55 points to finish at an all-time closing high of 24586.70.
Market circles said though there are concerns over rich valuations, investor sentiment remained upbeat because of better-than-expected results announced by two top-tier IT firms and hopes that finance minister Nirmala Sitharaman could announce more reform measures in the budget.
Investors bought PSU banks amid reports the Centre may speed up their mergers and the budget could also bring tax reliefs on bank deposits.
In the Sensex pack, State Bank of India was the biggest gainer, rising 2.55 per cent. Among other PSU banks while Bank of India (BoI) gained 2.83 per cent, Bank of Maharashtra surged 2.67 per cent, Bank of Baroda by 3.13 per cent and Union Bank of India by 2.20 per cent.
Bank of Maharashtra rose after it reported a 47 per cent jump in net profit at ₹1,293 crore for the April-June quarter, aided by a decline in bad loans and an improvement in interest income.
“The Indian market continues to experience optimism driven by positive expectations from the budget, robust FII inflows and better-than-expected results from the IT sector. Additionally, the initial results from PSU banks have triggered a strong rally in the PSU index,” Vinod Nair, head of research, Geojit Financial Services, said.
Forex traders said the positive trend in domestic equities supported the rupee at lower levels.
Anuj Choudhary, research analyst at Sharekhan by BNP Paribas, said the rupee declined on the positive dollar and rising domestic inflation.
The dollar rose on safe haven demand amid political violence in the US, he said, adding that rising odds of a rate cut by the US Federal Reserve in September may limit a sharp upside in the greenback.
The dollar’s strength was reflected in the dollar index which rose to a day’s high of 104.32 against the previous close of 104.09. Forex circles expect the rupee to trade in the range of 83.40-83.60. The dollar index gauges the greenback’s strength against a basket of six currencies.
The BSE midcap gauge jumped 0.95 per cent and smallcap index gained 0.21 per cent.
