On July 25, 1990 Sensex touched a milestone mark of 1000, 17.5 Rupees sufficed to buy 1 Dollar at that time, Sensex seemed to like to be a deer chased by the tiger i.e investors and Sensex touched the magical figure of 4000 just at the arrival of the spring i.e in March 1992, a whopping gain of 300% in over just 18 months, but contrary to the mass opinion that gains in stock markets lead to gains in currency as foreign investors would be lapping the listed equities at whatever price they get, the Indian currency Rupee depreciated against the Dollar and against every 28.37 Rupees 1 Dollar could be bought in March 1992, The Indian equity markets opened for the Foreign Investors in 1992 and celebrating the event the Sensex rallied from 2000 to 4000 from January 15, 1992 to March 30, 1992 i.e 100% within 2 months, your guess is my guess, you must be expecting that rush of the foreign investors pulled the markets and so Rupee might have appreciated against the Dollar, but contrary to our opinion while in January 1992 25.86 Rs fetched 1 Dollar, the rush of the foreign investors could not the stop the rupee from depreciating and 28.37 Rupees by an Indian Importer could purchase goods worth 1 Dollar, i.e while foreign investors were lapping Indian Equities they were hedging there positions by going short the Rupee and buying Dollars, or there were many other traders who were shorting the rupee and going long the dollar.
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