Mumbai: The Bombay Stock Exchange (BSE) index, Sensex, surged for a fifth consecutive day on Friday, taking gains for the week to 12.1%, its best performance since the last week of October 2008, but there were signs of investor fatigue.
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Shares seesawed through the day after the Sensex recovered a quarter of its value since hitting a 2009 low in early March, triggering profit taking in blue chips such as Reliance Industries and Infosys Technologies.
The benchmark rose for a third week in a row for the first time since late July last year, while the banking sector index jumped 19.1% in its best weekly performance since at least June 2003.
“It doesn’t look like this rally can be sustained over the next two to three weeks. Looking ahead, we have the elections. A lot of things are happening, and there are reasons for concern,” Arun Kejriwal, a strategist at research firm KRIS, said.
The BSE index closed up 0.5% at 10,048.49 points, a day after it had climbed past five-digits for the first time since 7 January - when Satyam Computer unveiled the country’s biggest corporate fraud, sparking a slide.
The rebound was helped by foreign buying of almost $620 million since mid-March, on increasing optimism the global economy was on a steady path to recovery.
However, most Indian fund managers are not enthused by the rally and are in no hurry to cut cash levels, with uncertainty about the political outlook ahead of month-long general elections that begin in mid-April.
Analysts said investors would also have to brace for a weak quarterly earnings season in April, with the outlook for the economy anything but bright.
A top policy adviser said the economic problems will be much worse in 2009 than in the past year. “Is the problem going to end in 2009-10? I don’t think so,” Planning Commission deputy chairman Montek Singh Ahluwalia said.
India’s economic growth is forecast to fall below 6% to a seven-year low in 2009-10 after the global crisis hits Asia’s third-largest economy harder than expected.
Still, banks were in demand on the improving global outlook for battered financials. Government-run State Bank of India, the country’s top lender, firmed 2.9% to Rs1,125.35.
Private-sector lender ICICI Bank rose almost 3% to Rs385.20 and HDFC Bank gained 0.2% to Rs996.60.
Reliance Industries, which had risen 17% in the past four days, shed 1.2% to Rs1,548. Infosys fell 2.5% to Rs1,346.75, but ended the week up 3.8%.
Maruti Suzuki slipped 0.7% to Rs765.85 after the leading car maker said it expected Tata Motors’ ultra low-cost car to have a marginal impact on sales of its small-car model.
Matrix Laboratories Ltd jumped 20% to Rs141.40, after generic drugmaker Mylan Inc said it plans to acquire the remaining 29% it does not already own in the Indian firm.
In the broader section, advancers led losers in the ratio of 1.5:1 on moderate volume of 383 million shares.
The 50-share NSE index was up 0.9% at 3,108.65.
Asian stocks mostly rose as hopes the global economy could not get any worse kept investors buying riskier assets.