Sensex turns choppy after 4-day rally, rupee hovers around 64/dollar

Indian stock markets and the rupee turned choppy on Wednesday after a four-day rally saw a complete turnaround in sentiments. The Indian rupee traded weak around the 64 per dollar mark, while the BSE Sensex swung between gains and losses as traders booked profits.

As of 10.15 a.m., the partially convertible rupee traded at 64.10 per dollar as Tuesday's close of 63.84. The BSE Sensex has risen over 9 per cent or around 1,800 points in the previous four trading sessions starting Wednesday. Markets were closed on Monday.

Several factors led to the sharp rally over the last week. The most prominent was the recovery in the rupee, analysts said. The rupee has gained over 6 per cent since the lows hit last Wednesday. That day Raghuram Rajan took over as the new Reserve Bank governor and announced a series of measures to defend the currency.

Globally, strong data from China lifted sentiments, while receding fears of a war in Syria and the consequent cooling of global crude oil prices led to growing optimism in Indian stocks.

Poor jobs data in the US had led to hopes that the Fed may delay tapering of its massive bond buying programme or the magnitude of tapering might be lesser than expected.

SV Prasad of Chime Consulting told NDTV that there has been a confluence of factors that have led to the market rally, but there are still lots of issues that need to be addressed.

"The more worrying thing is lack of depth in the markets.  The more important thing is creating more depth for markets," Mr Prasad added.

Foreign institutional investors (FIIs) bought Rs 2,563 crore of stocks in cash markets on Tuesday after buying nearly Rs 2,000 crore worth of cash shares in the previous three sessions. (Read: Foreign investors buy Rs. 5000 crore worth of shares in 4 days)

Jitendra Sriram, director & head of research at HSBC Securities & Capital Markets told NDTV that last week's gains were driven by short covering, but this week there has been a shift in trend.

"There has been fresh long build up in the markets. With currency stable, a lot of arbitrage money will also come in," he added.

The Sensex traded 60 points lower at 19,937 as of 10.15 a.m., while the Nifty traded 17 points lower at 5,879.