Mumbai: India’s main stock indexes recovered from earlier falls to post their biggest weekly gains of the year as Larsen & Toubro surged on expectations it would benefit from potential rate cuts and the government’s push to boost infrastructure.
Both indexes have gained every day this week to mark their longest winning streak since January, as banks have surged on strong hopes the Reserve Bank of India will cut interest rates this month in a bid to boost faltering domestic growth.
Infrastructure stocks have also been big gainers this week, helping push broader indexes to their highest closes since 7 May, after the government promised this week to kickstart projects, starting with roads and airports.
The twin hopes of government action and monetary stimulus have raised the hopes of investors, who have gone from selling on rallies to buying on declines after a tough month of May in which stocks slumped and the rupee fell to a record low against the dollar.
“Government is now getting serious. With the growth story down, hopes are that some more steps will be taken soon,” said Neeraj Dewan, director at Quantum Securities.
The main 30-share BSE index rose 0.4% to end at 16,718.87 points after earlier falling as much as 1%. The SENSEX gained 4.7% for the week, for its biggest weekly gain since early December.
The broader 50-share NSE index rose 0.4% to 5,068.35 points, also advancing 4.7% for the week.
The markets ended in green on Friday, with the Sensex closing 70 points higher. The Indian rupee sliding by 61 paise to stand at 55.55 against the US dollar. Mint’s Krishna Merchant gives the day’s biggest gainers and losers
The gains on Friday came despite rising worries about the global economy given the lack of clarity about potential U.S. monetary stimulus, worries China will post weak data on Saturday, and concerns about Spanish banking woes.
Still, some domestic technical indicators are turning more positive, with the NSE index breaking above the 200-day moving average since May 3.
Engineering conglomerate Larsen & Toubro shares gained 2.7% on Friday, adding 15.4% for the week.
L&T and engine maker Cummins India stand to particularly benefit from a government push toward infrastructure as well as potential rate cuts, Deutsche Bank said.
However, Cummins India shares fell 0.3% lower.
Among other infrastructure stocks, IVRCL rose 5.4% and Reliance Infra rose 4.2% on Friday.
Other blue chips seen as under-valued also rose, with Reliance Industries gaining 1.2%.
Banks fell on Friday on profit-taking but still posted strong weekly gains. ICICI Bank fell 0.1%, but still posted a 6.1% gain for the week, its biggest weekly gain since late January.