The inflows continued and allowed the dollar to touch a level of 72.25 thrice. The earnings growth was above the estimates, but the PE rose to 38 against an average PE of 18-20. The Sensex and Nifty started consolidating at these levels but individual stocks performed well especially in the chemical, IT and pharma industries as earnings growth was expected to be higher by about 15 per cent. The RBI bought nearly $121 billion from the market in a span of one year taking its forex reserves to a new high of $590 billion. The rupee also rose based on the flows, but here the RBI was standing like a wall as it prevented any appreciation of the rupee beyond 72.25. The dollar was getting sold everywhere as Asian currencies rose with the CNY rising to 6.40 levels from seven against the dollar. The stock market levels nearly doubled in about nine months from the fall and Sensex crossed 50,000 and the Nifty, 15,000. The stock market started to rise as inflows from FPIs, FDI, corporate borrowing (due to low interest rates in the western economy), inflows from a string of IPOs and NRIs started to increase. The growth estimates for the next FY began to be revised and it was expected that in the first quarter of 2021-22 the economy is likely to grow at 24 per cent considering the base effect and an overall growth of 12 per cent in the financial year 2021-22. Once the unlock phase started and the number of corona cases in the country started to fall, the economy returned to its growth phase in the third quarter of the financial year. Operation unlockĪfter a phased lockdown from March 18 to May 30, 2020, operation unlock was started in which the economy was opened in phases. At this juncture, Reliance started to sell stakes of Reliance Jio and Reliance Retail thus bringing in about $25 billion of FDI into the country. Meanwhile, the BSE Sensex had fallen to 25,000 levels and the NSE to 7,500 levels as the market gave a thought to the after-effects of the pandemic to the economy. The rupee fell to a new all-time low of 76.91 on Apbefore the RBI supported it and started selling dollars to stabilise it. Last year before the pandemic, it was consolidating between 69 and 71 broadly and as the pandemic broke out the pair also broke out and closed the financial year 2019-20 at 75.80.Īs the pandemic cases rose the consequences of the pandemic also rose with the GDP in the first quarter of 2020-21 plummeting by 24 per cent. The dollar-rupee rate has shown a tendency to consolidate in a range for 6-12 months and then give a break out.
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