New Delhi: Markets rebounded more than 3% on Friday after a four-day slide, as euro zone plans to shore up struggling banks eased concerns about Europe’s debt crisis and helped revive risk appetite.
Software services bellwether Infosys Ltd rose as much as 5.2%, while lenders State Bank of India and ICICI Bank bounced back as investors scooped up beaten-down stocks.
At 10:58 a.m. (0528 GMT), the main 30-share BSE index was up 3.01% at 16,267,22, with all but one of its components rising, as trading resumed after a local holiday when global markets had climbed.
“There seems to be a short-term reversal,” said Neeraj Dewan, director at Quantum Securities in New Delhi. “Some positive developments are happening in Europe and looks like things are moving in the right direction.”
The Bank of England launched a second round of quantitative easing to defend Britain’s faltering economy on Thursday and the European Central Bank threw another lifeline to commercial banks by renewing offers to lend them one-year funding in two operations, this month and in December.
Dewan said the Indian market was oversold and trading would be volatile with the quarterly earnings parade set to kick off next week.
State Bank rose as much as 3.5% and ICICI Bank gained 6.7%. The two stocks had slumped 7.7 and 7.1% respectively over the previous two sessions on fears of weakening asset quality after Moody’s cut its standalone rating of State Bank.
The bank sector index firmed 4.39%.
On Wednesday, State Bank tried to allay fears of any significant impact on its borrowing costs due to the downgrade and said it expected to receive an injection of up to $2 billion from the Indian government this fiscal year.
The BSE index had lost about 4% in the first three days of the week, primarily spooked by the State Bank downgrade on Tuesday. The market was shut on Thursday for a public holiday.
On the year, the index is down more than a fifth to be among one of the world’s worst-performing equity markets, with foreign portfolio investors turning net sellers after record inflows of $29.3 billion last year.
Asian markets were trading higher after the European Central Bank announced aggressive liquidity measures and the European Union said it would present a plan for a coordinated recapitalisation of banks by member states.
The 50-share NSE index gained 3.10% to 4,898.50. In the broader market, there were more than six gainers for every loser on total volume of about 173 million shares.
Investors also picked up metal producers that had taken a beating this year.
Hindalco and Sterlite Industries rose 4.2% and 7.2%, respectively. The two are the worst-performing stocks this year among the main index’s components.
Steel producers Tata Steel rose 4%, while Jindal Steel & Power surged 7.4%.
The MSCI’s broadest index of Asia Pacific shares outside Japan rallied 3.13%, while Japan’s Nikkei rose 0.93%.
New Delhi Television rose 3.1% to Rs 51.10, after the company and partner Kasturi & Sons decided to sell their respective stakes in Metro Nation Chennai Television Ltd for 150 million rupees.
Real estate firm Sobha Developers Ltd climbed 4.3% to Rs 212 after the company said it was confident of achieving estimated annual new sales of Rs 1,500 crore.