Market review: GAAR delay, oil reforms spur market, Sensex scales 2-year peak

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Sensex ended the week above 20,000 after two years due to strong buying. (Reuters) Sensex ended the week above 20,000 after two years due to strong buying. (Reuters)
SummarySensex ended the week above 20,000 after two years due to strong buying.

flared up by 105 paise to close the week at 2-1/2-month high of 53.71 against the Greenback on strong local equities triggered by delay in the implementation of controversial GAAR by the government and a fall in wholesale inflation for December boosted rate cut hopes.

Sustained dollar selling by exporters and some banks amid continued foreign funds inflow in local stocks also kept the rupee firm.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed the week a tad higher at 54.75 as against last weekend's close of 54.76, but touched a low of 54.88 at mid-week on fresh dollar demand from importers and some weakness in capital markets on Wednesday.

Later, it bounced back with a vengeance after the government allowed oil marketing companies (OMCs) to hike diesel price in small quantum periodically, which might help to recover their under recoveries and reduce the burden of fiscal deficit of the government.

The rupee then touched an intra-day high of 53.70 before concluding at 53.71 --highest closing since November 1, 2012, showing a rise of 105 paise, or 1.92 pct. Last week, it had risen by 31 paise, or 0.56 pct.

The Indian benchmark sensex closed the week sharply up by375.40 points, or 1.91 pct, while FIIs injected USD 697.34 mln in the first four days of the week.

On Monday, the governent said that it has postponed implementation of controversial General Anti-Avoidance Rules (GAAR) by two years to April 1, 2016, which was aimed at checking tax avoidance by overseas investors, giving a big relief to these foreign investors.

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