India stocks rebound; rupee erases gains

Indian stocks rebounded from their lowest level in a month yesterday as some investors judged the recent declines as excessive, and amid optimism a revival in monsoon rains will help policymakers’ efforts to revive growth. The BSE India Sensitive Index, or Sensex, rose 0.3% to 17,440.87 at the close. On Monday, the gauge ended at its lowest level since August 3. A revival in the monsoon has helped narrow the deficit to 12% from 29% at the end of June, according to the weather office. Bigger harvests of rice, oilseeds and cereals will help cool the inflation rate that is the highest among the largest developing economies, potentially improving chances of the central bank reducing borrowing costs. Reserve Bank governor Duvvuri Subbarao last reduced the benchmark repurchase rate in April after growth slowed for a fourth quarter. Borrowing costs have been kept unchanged at policy reviews in June and July on concern inadequate rainfall will fuel inflation. The rupee fell, erasing earlier gains, on speculation importers stepped up dollar purchases to benefit from the best exchange-rate in more than a week. The currency had strengthened as much as 0.3% earlier as investors expect the European Central Bank to announce details of a new bond-purchase plan this week, spurring fund flows into emerging markets. The rupee declined 0.2% to 55.6625 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 55.3750 earlier, the strongest level since August 24. “Since the US was shut yesterday (Monday) for a holiday, there were limited dollar supplies,” said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd in Mumbai. “All the bids I saw today were from oil and gold importers.” From gulf times.