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Signal of economic recovery boosts market confidence
Confident signals emerged from the Indian economy, which appears to have withstood the pressure of trade sanctions, with the stock market bouncing back and the government keeping a close watch on the foreign exchange market. The country's premium stock index recovered by an impressive 116 points, supported mainly by the Unit Trust of India. Significantly, even the FIIs were seen lending sizeable support and appeared undaunted by the imposition of sanctions on India. The rupee, however, came under some pressure and crossed the 40 mark against the dollar. Before closing at 40.50/55, it even touched a high of 40.80. The six month forward premium also looked up and closed at 9.08 per cent. But, with the Finance Ministry maintaining contact with prominent NRIs and the fundamentals of the economy well in place, the RBI said it did not see any run on the rupee. Pressure on the currency did not trouble the central bank which said India was not like South East Asian economies. Analysts said the government was making all-out efforts to ensure that the effects of trade sanctions did not spill over the FDI and even the portfolio investments by the FIIs. Pramod Mahajan, political adviser to the Prime Minister expressed satisfaction at the stock market recovery and assured that the panic phase was over. (Business Aaj Tak)