Rupee's Remarkable Recovery

The Indian rupee made a significant leap on Friday, breaking past the 85 level against the dollar, marking its strongest gain in over a month. This surge was fueled by foreign fund inflows and the reduction of speculative long-dollar positions. The rupee's performance this week has been its best in more than two years, with a 1.2% strengthening against the dollar.

Stock Market's Upward Trajectory

Parallel to the rupee's recovery, the Sensex and Nifty continued their upward trend, closing higher for the fifth consecutive session. The Sensex ended the day up by 557 points, reaching 76,906 points, while the Nifty rose by 160 points to 23,350 points. This marks their best weekly gain in over four years, with both indices gaining over 4% in the last five sessions.

Factors Behind the Surge

Several factors contributed to this financial uplift. The Federal Reserve's decision to maintain steady rates and hint at lower interest rates in the future played a significant role in weakening the dollar, thereby supporting the rupee. Additionally, the rebalancing of the FTSE All-World Index, effective from Friday, is expected to bring in approximately $1.5 billion, further bolstering the rupee's position.

Foreign portfolio investors, who had been offloading Indian equities since late last year, have turned into buyers in two of the last four sessions, according to provisional data. This shift, combined with the strong buying by foreign funds amounting to a net Rs 7,470 crore into stocks, has significantly contributed to the market's rally.