The Reserve Bank on Thursday said it has put in place contingency plans to infuse liquidity into the system to deal with any possible volatility in markets on Friday in view of the election results.
In line with rally in stocks, the Indian rupee on Monday appreciated for the second straight session and closed with a eight paise gain at a one-week high of 61.36 against the Greenback.
The domestic currency had gained by 80 paise, or 1.19 per cent, in previous five trading days.
Heavy selling of the US dollar by banks and exporters in the face of renewed capital inflows predominantly kept sentiment highly buoyant
The finance ministry and RBI must get less conservative and improve co-ordination.
India's current account deficit narrowed sharply to just $300 million
However, the hefty initial gains of the rupee, which had jumped to 61.05 intra-day, were substantially erased on month-end demand for US dollars from private oil firms and some defence-related purchases, amid fall in domestic stocks.
Sustained dollar unwinding from exporters and banks amid weak overseas trend gave a boost to the rupee
The NSE Nifty too ended 58.60 points, or 0.54 per cent, higher at 10,967.30 after shuttling between 10,985.15 and 10,928 during the session.
The rupee had gained 24 paise to close at nearly one-week high of 60.95 against the dollar yesterday following selling of the US currency by exporters and some banks, amid sustained heavy capital inflows.
Traders said falling crude prices in the global market was a big boost for the economy as it lightens the country's import bill burden, eases inflation and current account deficit concerns.
A customer wanting to buy a car would have to wait a long time for delivery.
The rupee briefly touched 66.78 in late afternoon trade due to stray dollar buying by some banks.
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The rupee tumbled past 63.00 to the dollar, down about 2 per cent on the day and breaching the previous low of 62.03 hit on Friday despite a spate of measures in recent weeks by the central bank and government to defend it.
Metals, auto and banking shares were in the limelight in this session; the FMCG pack, however, ended lower.
The rupee had gained 6 paise to close at 60.07 against the dollar in Thursday's trade on fresh selling of the American currency by banks and exporters in view of strong capital inflows.
Adequate dollar supply gave a boost to the local currency
Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to the already cooling economy.
The 30-share Sensex closed at 27,112 up by 481 points whereas the Nifty ended higher by 139 points at 8,115.
The 30-share Sensex ended up 292 points at 29,571 and the 50-share Nifty closed up 75 points at 8,910.
Investors engaged in profit booking in the recent gainers at attractive and higher valuations.
Govt rules out controls on FII capital as Sensex tanks 3.97%, rupee breaches 62 intra-day & gold surges the most in two years
After opting for status quo in policy rates, Reserve Bank Governor Raghuram Rajan on Tuesday said any more cut will depend on further transmission of previous rate cuts by banks, softening in inflation and progress of monsoon.
The Indian rupee slumped to a record low near 69 to the dollar on Wednesday on growing worries that foreign investors will continue to sell out of a country facing stiff economic challenges and volatile global markets.
'India easily remains one among the more attractive large economies, with high growth and stable/improving macros, as a top investment destination.' 'We are looking pretty good.'
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