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Sensex rallies on Thackeray’s release

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CIOL Bureau
New Update

Ranjit Gangadharan

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MUMBAI: Indian shares rebounded on Tuesday after a local court dismissed a

case against the Shiv Sena leader Bal Thackeray, but the rupee resumed its slide

as the impact of the central bank's support package wore off.

The benchmark Bombay index rallied from more than three per cent down in the

morning to over four per cent higher in mid-afternoon before moderating slightly

towards the close.

"It was a trigger to buy in," said one trader from a foreign

brokerage about the court ruling. "Foreign hedge funds are among the

buyers."

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A Mumbai judge set free Bal Thackeray just a couple of hours after his arrest

after dismissing the case against him for inciting violence during the bloody

communal riots in 1993, saying it was too old to try.

Thackeray's release sparked buying across the board as fears of unrest in the

city faded and potential problems for Prime Minister Atal Behari Vajpayee's

coalition government, of which the Shiv Sena is the third largest member, also

disappeared.

By 4.00 p.m. (1030 GMT) the benchmark share index was up 3.53 per cent at

4,336.2, up 147.86 points from Monday and off a morning low of 4,052.61.

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The market had dropped more than six per cent on Monday, largely in reaction

to the Reserve Bank of India's interest rate increase and liquidity squeeze to

support the rupee.

Rupee weakens



The Indian currency again showed signs of weakness on Tuesday, and at 4:00 p.m.
(1030 GMT) stood at 44.890/910 per dollar, compared to Monday's close of

44.74/75.

The rupee hit a brief low of 44.98 following Thackeray's arrest.

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HDFC Bank’s head of equities Abhay Aima said the worst was probably over in

the share markets, and saw little downside risk.

He said concerns about the effects of higher interest rates on the market had

been overplayed and did not see the rupee posing major problems.

Aima said fund managers normally factored in a five per cent depreciation of

the rupee in a year, meaning the current fall of about 2.9 per cent since March

31 should not be a cause for alarm.

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The stronger dollar should boost software companies’ revenues as they made

most of their money from exports.

Among the leading gainers on Tuesday afternoon were software stocks Satyam

Computer Services, up 8.0 per cent to Rs 2,610.05, Wipro, up 8.0 per cent to Rs

2,464.05, SSI Ltd., up 10.47 per cent to Rs 2,500, and Infosys Technologies, up

4.78 per cent to Rs 7,120.

(C) Reuters Limited 2000.

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