Mumbai: Markets rebounded 1.2% on Friday after sliding for nine consecutive sessions, with investors encouraged by a drop in world commodity prices. Financials led the rise.
Traders said the outlook was still weighed down by worries higher borrowing costs would squeeze corporate earnings in the coming months, and the market was on track to post weekly fall.
“Cooling commodity prices could ease cost pressures, and the market is taking some relief from that,” said Vaibhav Sanghavi, director of Ambit Capital.
“But it is hard to predict if the upside is here to stay or not. Commodity prices are generally volatile and they need to be watched before we infer anything.”
Global oil prices had fallen as much as 10 percent on Thursday, but Brent crude was up 1.3 percent at more than $111 a barrel on Friday and US crude climbed back above $100.
At 11:44am, the 30-share BSE index was up 1.2% at 18,429.30 points, with 24 components advancing. It is down 3.7% so far in the week.
A larger-than-expected 50 basis point rate increase by the central bank on Tuesday had triggered a selloff on worries it would hurt consumer spending and dent earnings of companies.
Foreign funds have been net sellers in seven of the eight sessions to May 4, dumping nearly $1 billion of stocks in the period.
The 50-share NSE index was up 1.1% at 5,521.60. Gainers were more than twice the number of losers in the broader market, on volume of 215 million shares on the NSE.
The banking sector index was up 2.6%, after falling 6.6% over four days.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank climbed between 1.4% and 4.3%.
Metal producers such as Sterlite Industries , Hindalco fell 2.5% and 1.3% respectively as base metal prices fell in Shanghai and London as part of the broader commodities sell off.
Bharti Airtel shed 1.3%, extending Thursday’s 3.2% fall after the top telecoms firm posted a bigger-than-expected fall in quarterly profit.
Cipla fell as much as 2.7% after the drugmaker said late on Thursday its March quarter net profit fell 22.5%, lagging forecast.
The stock, which had dropped 3.6% over the previous two days, later recouped and was trading up 1.3%.