Mumbai: India’s main stock index rose 0.7% on Friday and lifted the market to its sixth consecutive weekly gain, its best best run in more than 1-years, on improving hopes for the global economy.
State Bank of India, ICICI Bank and HDFC Bank led the market up after US bank JPMorgan Chase & Co beat forecasts with its quarterly profit and allayed concerns about the world financial sector.
Engineering conglomerate Larsen and Toubro and IT-services exporter Infosys Technologies also contributed to the rise.
Traders said the market, which has jumped almost a third over six weeks, was vulnerable to a correction with analysts split on whether the central bank would cut interest rates to boost growth when it reviews policy on Tuesday.
Political concerns could also halt the rally as voting picks up in month-long general elections that began on Thursday.
“In the last four elections on average the market has performed well in the run-up to election season but poorly thereafter,” Morgan Stanley analyst Jonathan Garner wrote in a report.
He urged clients to take profits, saying Indian valuations traded significantly higher last month while earnings scores had deteriorated.
This was partly visible with the 30-share BSE index erasing gains of as much as 3.6% to end up 0.69%, or 75.69 points, at 11,023.09. It briefly turned negative in late trade as some investors booked profits, traders said. The 50-share NSE index rose 0.4% to 3,384.40 points.
The benchmark, which posted its best weekly run since gaining for eight consecutive weeks in September 2007, rose 2% on the week.
The rally was underpinned by robust foreign fund buying of about $1.4 billion since mid-March. There could be consolidation before the elections end by mid-May, with little sign of either of the two main political groups winning a majority on their own, analysts said.
“If you want a good market later, you need to see a correction now. The market has gone up so much recently, we will definitely see a fall in the near term,” Ajay Parmar, head of research at Emkay Global, said.
Gainers and losers were even in the main index, while in the broader section advancers led declines 1,366 to 1,204 on heavy volume of 511.9 million shares.
Still, glimmer of hope the worst was over for the world economy and media reports that property firm Unitech Ltd has raised $325 million through a placement of shares with institutional investors to repay a part of its debt improved sentiment and sent shares higher.
State Bank of India, the country’s top lender, gained 3.5% to Rs1,306.35 while smaller rivals ICICI Bank rose 3.5% to Rs441.45 and HDFC Bank climbed 0.4% to Rs1,068.20.
The banking sector surged 9.5% on the week.
No. 2 outsourcer Infosys recovered 3.9% to Rs1,393.10, after sliding almost 5% over the past two days following a weak outlook forecast by the company.
Larsen & Toubro jumped 4.2% to Rs866.50, ending the week with gains of 4.5%, after the company on Monday lost the race to take a controlling stake in fraud-hit outsourcer Satyam Computer. Analysts had warned the possible acquisition would distract Larsen from its core business.
Energy giant Reliance Industries, which has the most weight in the main index, dropped 1.1 percent to Rs1,717.50. The stock had lost 4.9% on Thursday after having jumped by a fifth since 30 March.
Asian shares were mixed on Friday, with Japan’s Nikkei rising 1.7% and MSCI’s measure of other Asian markets edging down 0.3%.