Flexible yuan renews global hopes
The weekend global good news of China allowing a flexible yuan and the decision of the Indian government to keep Unit Linked Insurance Plans (Ulips) under the purview of the insurance regulator IRDA saw the Indian markets regain their positive momentum.
There was a slight blip on Friday after six positive trading days. Globally, the stock markets were buoyant following the weekend move by China to let the yuan rise to its highest level to the dollar since July 2005.
The yuan in the spot market climbed as high as 6.8015 against the dollar, or up 0.38 per cent. This invigorated the stock markets.
The Sensex traded over 200 points on opening and stayed in the 290-312 range all day, to close 305.73 points up at 17,876.65. The Nifty stayed above the 5300 mark and closed at 5353.30 up 90.70 points.
China’s flexibility with the yuan is an indication that China views the global financial crisis as passed its prime and it is a significant policy change, said Mr Rugved Dhumale, associate vice-president, Macklai Financial and Commercial Services. The rupee was up one per cent against the dollar and all other currencies also appreciated against the dollar.
Mr Avinash Gupta of Bonanza Portfolio Ltd said metal stocks were in limelight on Monday after China decided to go for a free float of her currency and stocks of the producers of steel, aluminum and other metals were in demand. He said the market is expected to be volatile in view of the expiry of derivative due this week. It had been rallying for the last few days and is close to its 52 weeks high. A phase of consolidation cannot be ruled out.
Mr Alex Mathews of Geojit BNP Paribas Finana-cial Services sees an upside target of 5432 for the Nifty which breached the resistance level of 5330.
The MSCI Asia Pacific Index was up the most in almost seven months which gave support to our markets as well. There is speculation that the relaxing of the yuan to the dollar would bolster growth in China which boosted markets globally.
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