The Indian markets saw a relief rally on Friday, due to positive developments on the global front. Yesterday, the Bank of England launched a second round of quantitative easing and the European Central Bank kept rates unchanged, while offering new emergency loans to the banks. The news that Citigroup has raised its rating on Indian stocks to ‘neutral’ was a catalyst.
The 30-share Sensex of the Bombay Stock Exchange gained 440.13 points or 2.8 per cent, to close at 16,232.54. The index however, ended 1.3 per cent lower for the week, its second weekly fall over three weeks. The broader Nifty of the National Stock Exchange settled the day at 4,888.05, up 136.75 points or 2.9 per cent.
“Positive announcements from ECB and the Bank of England had led to rallies in global markets over the past two days and Indian markets largely played catch-up, by opening about three per cent higher,” said Dipen Shah, head, fundamental research, Kotak Securities. “The markets will take cues from more economic data from the US/Europe. Moody’s has already downgraded ratings of 12 UK banks, a reflection of the situation of financial institutions there.”
On Friday, the gains were led by software stocks, ahead of sector earnings that kick off next week, as well as top-listed Reliance Industries and financial stocks, all beaten down in the past few sessions. RIL gained 4.5 per cent or Rs 34.20 to close at Rs 801.45. State Bank of India rose 2.1 per cent, while private sector rivals ICICI Bank and HDFC Bank gained 5.8 per cent and 2.6 per cent, respectively. Infosys will report quarterly earnings on Wednesday.
Meanwhile, Citigroup raised its rating on Indian stocks to ‘neutral’, based on a decline in global commodity prices, lower share valuations and a short-term peak in borrowing costs, according to a report issued yesterday.
Telecom stocks, however, ended lower. This was after Goldman Sachs said, in a note, that it expected Bharti Airtel and Idea Cellular’s quarterly earnings to miss Street estimates due to higher forex estimates, wages and 3G (third-generation spectrum purchase) interest expenses. The sector stocks were also weighed down by news that the government would unveil a much-awaited new telecom policy on Monday, which is expected to include revised rules on grant and pricing of second-generation radio airwaves.
According to provisional figures, foreign institutional investors net-bought Indian shares worth Rs 492 crore on Friday. The other gainers in the Sensex pack included Sterlite Industries, L&T, HUL, Coal India, BHEL, DLF, Hindalco and Jindal Steel.