Monday evening Indian Rupee, Glod, and Sensex Index updates.

Indian investors could join the global gold rush to hedge against the turmoil in stock exchanges. Helping them staunch the blood on the bourses, investors the world over are reallocating their portfolio in favor of commodity markets, with institutions buying gold as a safe-haven investment instrument.

Sub-primes have left Indian stocks scathed, with foreign institutional investors pulling out money from the markets here to counter losses in the US. This has put pressure on the rupee, which is expected to weaken against the dollar, according to analysts.

“With the rupee weakening and gold price increasing due to safe-haven investing, an Indian participant may end up paying dearly for the commodity, because Indian prices are set on a conversion of rupee-dollar parity,” said Mohan Natarjan, director, Kotak Commodity Services Ltd.

“We have already seen a 10-15% portfolio reallocation in favour of commodity markets with institutions buying gold as a safe-haven investment instrument on the back of the sub-prime slowdown in equity markets,” Eluned Jones, former specifications officer at Chicago Board of Trade, told FE.

COMEX gold December futures closed sharply higher, up $8.8 an ounce at $681.80 an ounce, over the weekend on safe-haven buying.

The trend may be temporary, however, as gold would see resistance at $687-691 an ounce and be supported at $670 an ounce for the week with European central banks selling the commodity, offsetting the demand pull, and providing an opportunity to book gains in the future.

“Support levels could come down to $660-661 in a week’s time, which would be a good time to buy. Traditionally, gold is expensive during this season due to festive demand, but with European banks selling reserves, there is bearish pressure on it. Gold would, however, go up to $720-$750 an ounce once $700 is breached, which could happen with the dollar weakening once the full impact of sub-primes is felt,” said Harmit Virvadia, research analyst, Angel Broking.
The rupee on Monday ended flat at 40.6250/6350 against the US currency after an early surge to 40.54 levels on dollar selling and a pull-back rally in equity markets.

The local currency lost its initial gains due to late dollar demand following reports that the pound sterling and the euro weakened against the greenback in global markets.

The BSE sensex started the week on a winning note ending 149 points higher on buying support from funds. Investor confidence was boosted as a number of central banks injected funds into the market to ease the current liquidity crunch stemming from risky lending practices in the US during the last few years.

The sensex moved past the psychological 15K level again to an intra-day high of 15,045 and ended at 15,017. The previous two sessions had seen the index lose 440 points or 2.87% amid extremely volatile trading following global market meltdown. During the day, the NSE nifty too recovered by 40 points to close at 4,374.

On Friday, the US markets recovered from a global meltdown, erasing most of the Dow Jones Industrial Average's 213-point drop in the previous session. This had come after the Federal Reserve added $38 billion to banks to ease the liquidity crunch in credit markets. The fund infusion continued on Monday as the Bank of Japan injected 600 billion yen ($5.1 billion) into its system, pilling on its 1 trillion yen infusion on Friday. The European Central Bank lent emergency money to banks for a third day.

The fund inflow boosted global markets. Asian stocks bounced back from their biggest drop in five months with Japan, Hong Kong, Singapore, South Korea and China ending with gains of around 1%. European stocks closed higher as FTSE 100 gained 2.5%, France's CAC 40 added 2.1%, and Germany's DAX rose 1.4%. In early trade on Monday, the Dow Jones Index was up marginally about 0.5% and volatility was low.

The rally in the domestic market was driven largely by cement, auto and FMCG stocks. Index heavyweights RIL, ICICI Bank and Bharti Airtel also notched up impressive gains and added to positive trading sentiment.

Among BSE's sectoral indices, auto, metals and FMCG gained over 1% each. The only laggard was IT index, which closed marginally lower as the rupee held its ground to end flat at 40.62 to the dollar.
Rupee / US Dollar Forex Currency News, Gold in India
The day's rally saw investor wealth increase by Rs 47,500 crore with the BSE market capitalisation now at Rs 44.2 lakh crore.

In a fairly volatile trade at the Interbank Foreign Exchange (forex) market, the Indian unit moved in range of 40.54 and 40.64 after resuming strong at 40.59/60 from Friday's close of 40.63/64 a dollar.

There was good dollar demand from banks and oil refiners in the forex market in the light of stronger dollar against the pound sterling and the euro overseas, forex dealers said.

Initially, the rupee drew support from a surge in stock markets and dollar selling by exporters and a leading foreign bank, commented a dealer.
The Rupee today closed slightly up at 40.6250/6350 per dollar as against friday's close of 40.64 per dollar.

Earlier, in the morning session Rupee had opened at 40.62/64 per dollar, almost at the same levels of the previous closing, and went up to a day's high of 40.53 by noon before losing by nearly 10 paise against the dollar in afternoon day trade.

Market remained quiet for most part of the day as investors were cautious about the market movements which had a corresponding impact on the currency value, said a dealer.

''The market was quiet today with not much demand seen from the investors. Rupee is expected to stay range bound in near term at 40.25-65 per dollar levels.'', he said.

Reserve bank excercised the reverse repo window worth Rs 20,000 crore today, slightly above from the previous day's margin of Rs 19,625 crore and fixed the reference rate at Rs 40.56 per US dollar, up by 11 paise, compared to its previous day's rate of Rs 40.67 per dollar.

Forward premia lowered slightly today as six month premia ended at 1.83(1.90) per cent while one year premia ended at 1.87(1.94)per cent.

Against major world currencies, Rupee behaved comparatively stronger Against euro, rupee ended at 55.41/42(55.46) per each unit, against pound sterling it ended at 81.74/75(81.60) per each unit while yen was quoted at 34.31/31(34.40) per hundred units each.

Traders, however, anticipated further pressure on rupee from the government's restrictions on external commercial borrowings (ECBs) and the central bank's decision to raise the ceiling on market stabilization bonds (MSS).

Asian stocks showed stability during the day while the Bombay Stock Exchange benchmark, Sensex, bounced by 149 points or 1.0 per cent at close.
The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.