On a rare day of good news amid distressed economic conditions, Indian exports in August grew at the fastest pace in two years, leading to a four-month-low trade deficit of $11 billion, while domestic car sales snapped a nine-month streak of declines.
On the back of the positive signals, the BSE Sensex zoomed by 727 points to inch closer to the 20,000 mark, while the rupee gained 140 paise to close at 63.84 against the dollar. In four straight sessions, the local currency has flared up by 379 paise or 5.6 per cent.
India's exports rose 13 per cent in August to USD 26.14 billion on an improving global situation. Imports fell 0.68 per cent to USD 37 billion, largely due to subdued shipments of gold, which stood at USD 0.65 billion in August against USD 2.2 billion in the previous month.
However, oil imports grew by 17.88 per cent to USD 15.1 billion in August.
"Things are improving in Europe and in the US also the economic condition is better. So signs of stability in the major economies, including the UK, and the positive growth in the US will lead to increase in demand," Commerce and Industry Minister Anand Sharma told reporters here.
Positivity was also seen in the domestic automobile sector, which snapped a nine-month streak of declines in car sales by posting a growth of 15.37 per cent to 1,33,486 units in August.
Industry experts, however, said it was too early for the sector to be celebrating as the August numbers were mainly due to a low base effect due to a lockout at Maruti Suzuki India's Manesar plant last year.
During April-August, India's exports were up 3.89 per cent at USD 124.42 billion. Imports grew by 1.72 per cent to USD 197.79 billion, leaving a trade deficit of USD 73.36 billion.
Trade deficits have been fuelled by high imports of gold and crude oil, contributing to the widening current account deficit that touched an all-time high of 4.8 per cent of GDP, or USD 88.2 billion, in 2012-13.