Mumbai: Indian shares rose 2.9% on Friday to its best close almost two weeks as investors took cues from Asian and European peers and scooped up bargains after the market shed more than 7% over the past two weeks.
The rebound took gains in the main index to 1.7% for the week, after falling 4.7% last week when it snapped a run of 14 weekly gains - its best in 4 years - during which it leapt 83%.
Energy giant Reliance Industries, private-sector lender ICICI Bank and engineering and construction firm Larsen & Toubro led the gains.
“I think the undercurrent next week is going to be very positive,” said Jayesh Shroff, who helps manages about $1 billion in equity at SBI Mutual Fund.
Expectations the government’s budget on 6 July will unveil pro-market reforms such as privatisations and relaxation of foreign investment rules will underpin the market, he said.
“Even if there are no specific numbers given in the budget, there is confidence it will be reformist and will lay out the government’s priorities,” Shroff said.
However, Sun Pharmaceutical Industries tumbled as much as 17.6% after US officials said authorities seized all medicines produced by its Caraco Pharmaceutical Laboratories unit, following repeated violations of manufacturing standards.
The 30-share BSE index ended up 2.92%, or 419.02 points, at 14,764.64, with 27 stocks advancing, after rising as much as 3 percent in late in the afternoon. The 50-share NSE index rose 3.15% to 4,375.50.
“Everyone is eyeing the budget, and some may just take a shot at the budget expectations being met. So we could see a rally of about 700 points over the next week,” said Hitesh Agrawal, head of research at Angel Stock Broking.
But trading could be choppy on worries a below-normal monsoon forecast will hurt demand in the crucial rural heartland and hit corporate profitability. There are also concerns shares are pricey after the market’s rally since mid-March.
Over the past two weeks, net foreign fund inflows since mid-March have dropped to about $7.5 billion from around $8 billion.
Still, the Indian fund unit of HSBC is overweight on industrials and is raising exposure to metals because of signs of an economic revival and hopes for higher government spending to boost growth, a fund manager said.
“We are overall positive on the infrastructure sector given that we expect the new government to focus on economic reforms,” Jitendra Sriram, who took over as head of equity in February at HSBC Asset Management (India), said.
Larsen climbed 5.5% to Rs1,611.20, taking gains for the week to 7.7%. ICICI Bank rose 8% to Rs754.35,ending the week up 5.7%. Reliance, which has the most weight in the main index, advanced 3.5% to Rs2,028.65.
Sun Pharma, the country’s largest drugmaker by market value at about $5 billion, ended down 12.2% at Rs1,140.45, after sliding to as much as Rs1,070 - its lowest since April 8.
In the broader market, gainers led losers by almost 2 to 1 on below-average volume of 383.2 million shares.
Asian shares climbed, with Japan’s Nikkei rising 0.8%, while MSCI’s measure of other Asian markets gained 1.8%.