Heavy foreign funds inflows, mainly in debt, as well as equity markets too aided the rupee recovery.
The rupee resumed lower at 53.30/31 per dollar at the Interbank Foreign Exchange (Forex) market against the last weekend's level of 53.10/11 per dollar and hovered erratically in a range of 52.62 per dollar and 53.40 per dollar, before ending at 52.71/72 per dollar, a gain of 0.73%.In the last four weeks, the rupee has fallen by a massive 190 paise, or 3.71%.
Fresh selling of dollars by banks and exporters on the back of capital inflows from foreign funds mainly boosted the rupee value against the dollar, a forex dealer said.
According to the data available with Securities and Exchange Board of India (Sebi), foreign institutional investors (FIIs) infused over $1 billion in debt markets and pumped in $190 million in equities till January 5.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd said, "Rupee dominated greenback as foreign institutional investors (FIIs) were buying in Indian debt market."
"The Dollar index, which tracks its performance against a basket of major currencies, traded bullishly most of the week as Euro, GBP, Yen and other currencies traded weak against the greenback simultaneously.
"It hit a one-year high against a basket of currencies and the euro fell to a 16-month low against the Dollar and sterling as worries about the euro zone's fiscal stability persisted," he added.
In the year 2011, rupee has crashed by Rs 8.4, or 18.79%.
Forex dealers said increased demand for the dollar from importers and concerns over the widening fiscal deficit mainly weighed on the rupee sentiment in last few weeks.
The rupee had touched an all-time low of 54.32 on December 15, 2011, after which the central bank imposed curbs on bank's trading limits to keep down the speculation on the currency.
"The current currency market is completely driven by FII inflows and hence the upside movement in the local unit is temporary as there is no fundamental news driving the movement," Abhishek Goenka, CEO, India Forex Advisors said.
Meanwhile, food inflation entered negative zone at -3.36% for the week ended December 24 against 0.42% in the last week, a good sign for the Indian economy, indicating a reversal in the interest rate cycle.
The RBI fixed the reference rate for US dollar and Euro at Rs 52.7838 and Rs 67.4618 from Rs 53.2660 and Rs 68.9005 last weekend, respectively.
The benchmark six-month forward dollar payable in June ended weak at 150-152 paise fro last weekend's close of 162-164 paise and far-forward contracts maturing in December also settled lower at 250-252 paise from 266-268 paise.
The rupee improved further against the Pound Sterling to end the week at Rs 81.77/79 from Rs 82.04/06 in the preceding weekend and also shot up further to close the week at Rs 67.43/45 per euro from last weekend's level of Rs 68.74/76.
It, however, recovered against the Japanese yen to settle the week at Rs 68.33/35 per 100 yen from Rs 68.64/66.
Stocks: The BSE benchmark Sensex settled the first week of the 2012 on an optimistic note, recovering sharply by nearly 394 points to close at 15,848.80 on sustained buying by foreign funds amid some positive developments at home.
Buying was strong and 12 out of 13 sectoral indices closed in the green, while only BSE-FMCG ended with minor losses. Capital goods, PSUs, banking and metal segments were at the forefront of the rally.
The government last week decided to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian market from January 15, to attract more foreign funds against the backdrop of significant foreign capital outflows.
Reserve Bank governor D Subbarao also indicated that it may start lowering lending rates on concerns about economic growth.
Food inflation also entered the negative zone at -3.36% for the week ended December 24.
Finance minister Pranab Mukherjee said that low inflation and likely reversal of tight monetary policy would boost economic growth prospects.
The government on Friday also stated that it may notify 100% FDI in single-brand in retail segment.
All these positive factors supported the market to close in positive terrain.
The BSE 30-share barometer commenced the new year on a strong note at 15,534.67 against last weekend's close of 15,454.92 and moved in a range of 16,004.69 and 15,358.02, before concluding the week at 15,848.80, a net gain of 393.88 points, or 2.55%.
The NSE broader 50-issue Nifty also flared up by 122.60 points, or 2.65%, to settle the week at 4,746.90.
Last couple of the days of the week saw some selling at the fag end on concerns over the deepening euro-zone problems, showing some hesitancy in the market.
Expectations of a weak Q3 results from some key corporates due to slowdown in economic growth, higher interest rates and input costs also affected the sentiment.
Most of the global markets displayed narrowly mixed trend during the week following Christmas holiday mood.
From the Sensex pack, L&T spurted by 8.68%, Coal India (6.30%), Tata Power (5.39%), Cipla (5.09%), HDFC Bank (5.63%), ICICI Bank (8.89%), BHEL (4.87%), Sterlite Ind (5.30%), Tata Steel (8.22%), RIL (3.15%), Maruti Suzuki (3.77%), Jindal Steel (2.86%), HDFC (2.86%), Infosys Tech (2.62%) and SBI (3.10%).
However, Bajaj Auto dropped by 9.09%), Hero MoroCorp (9.21%), M&M (4.22%), Bharti Airtel (3.50%), DLF (3.52%) and NTPC (2.15%).
Among sectoral indices, BSE-CG jumped by 6.22%, BSE-PSU by 6.18%, Bankex by 6.02% and BSE-Metal by 5.37%.
Total turnover for the week on the BSE and NSE was at Rs 9,684.70 crore and Rs 43,220.19 crore, including figures of special trading on the Saturday.
The National Stock Exchange conducted a special trading session on January 7 for upgrading its futures and options trading infrastructure to improve the processing capability.
To maintain uniformity in trading timetable, the BSE also conducted the special trading session.
Oils and Oilseeds: Edible oils firmed up in the first week of 2012 at the oils and oilseeds market on good demand from retailers and stockists amid restricted arrivals from producing centres.
A firming trend in overseas markets mainly supported the uptrend in edible oil prices.
Meanwhile, castorseeds bold and castoroil commercial dropped further due to lack of enquiries from shippers and soap manufacturers.
Also, reduced demand from industrial users, heavy offloading by stockists and traders led to a fall in prices.
Castorseeds futures edged up owing to renewed export orders.
Linseed oil, however, continued to rule steady in the absence of market moving factors.
In the edible oils section, groundnut oil resumed higher at Rs 1,000 and improved further to all-time high of Rs 1,020, before finishing at Rs 1,015 from preceding weekend's level of Rs 995, showing a smart rise of Rs 20 per 10 kg.
Refined palmolein opened higher at Rs 605 and firmed up further to Rs 613 before ending at Rs 605 from last weekend's level of Rs 601, showing a gain of Rs 4 per 10 kg.
Turning to the non-edible section, castorseeds bold resumed higher at Rs 4,000, but later reacted downwards to close to Rs 3,850 from previous weekend's level of Rs 3,940, disclosing a sharp fall of Rs 90 per 100 kgs.
Castor oil commercial opened at Rs 830, but later dropped to finish at Rs 800 from preceding weekend's level of Rs 818, showing a loss of Rs 18 per 10 kg.
Linseed oil closed unchanged at Rs 860 per 10 kg.
Moving to the futures section, castorseeds for March delivery resumed higher at Rs 3,700 and moved in a range of Rs 3,795 and Rs 3,670, before finishing at Rs 3,690, against last Saturday's closing level of Rs 3,683, showing a modest gain of Rs 7 per tonne.
Bullion: Gold and silver recovered smartly at the bullion market during the week under review.
The yellow metal made a smart comeback this week on renewed buying interest at lower levels and heavy stockists as well as investors offtake well supported by bullish global cues, the fag-end saw a nominal profit-selling.
Silver rebounded after the four-week fall on frantic speculative buying activity amid good industrial backing, though the gains were reduced due to profit-taking on couple of trading session.
On the global front, the precious metals regained the momentum after the extended New Year holidays on renewed safe haven buying mostly on lower dollar amid heightened Iran-US tension, although the positive US economic data kept the prices under pressure and fag-end rebound in dollar resulted profit-taking by the investors.
In New York, gold for February delivery recouped to $1,616.80 an ounce as against previous weekend's level of $1,566.88.
Silver for March delivery rose to $28.68 an ounce as compared to previous weekend's level of $27.92.
Standard gold (99.5 purity) resumed slightly higher at Rs 27,205 and surged to an high Rs 27,835 before closing at Rs 27,700 from preceding weekend's level of Rs 27,190, showing a good gain of Rs 510, or 1.88%, per 10 grams.
Pure gold (99.9 purity) opened higher at Rs 27,335 and rallied further to Rs 27,960, before ending at Rs 27,830 over its previous close of Rs 27,330, showing a rise of Rs 500, or 1.83%, per 10 grams.
Silver ready (.999 fineness) started firm at Rs 51,090 and advanced further to Rs 52,740, before finishing at Rs 51,865 from last Saturday's closing level of Rs 50,970, disclosing a smart gain of Rs 895 or 1.76% per kg.
