BSE Sensex heads for first weekly gain in four

MUMBAI (Reuters) - Indian shares rose on Friday and headed for their first weekly gain in four as consumer goods stocks such as Maruti Suzuki gained after a panel recommended a 23.55 percent pay hike for current and former government employees.

Sentiment was also broadly supported by continued gains in Asian shares as investors bet the U.S. Federal Reserve would raise rates in December but proceed cautiously with any further tightening.

But analysts warned the rally could be short-lived, with volatility expected next week ahead of the derivatives contracts expiry on Nov. 26.

"Volatility has become the hallmark of this market. We haven't seen real strength in the market even though such rallies do come, it's mostly an opportunity to sell into the rallies," said Jayant Manglik, president of retail distribution at Religare Securities.

 

The broader Nifty was 0.53 percent higher after gaining as much as 0.81 percent earlier in the day. The index was on track to post a gain of 1.69 percent for the week.

The benchmark Sensex was 0.58 percent higher after gaining as much as 0.84 percent earlier.

Both indexes were on track to record their first weekly gain in four and post their best weekly performance since the week ended Oct. 9.

Consumer goods makers were among the leading gainers as the proposed pay hike for government workers could add at least 1.02 trillion rupees ($15.43 billion) to federal spending in 2016, raising hope some of that money would be spent by the employees.

Maruti Suzuki and Mahindra & Mahindra gained 2 percent each.

Among other gainers, GAIL rose 9.25 percent and Petronet LNG added 7 percent, on reports of Qatar-based RasGas agreeing to modify its long-term contract with Petronet.

Shares of tea producers also rose, with McLeod Russel India gaining 3.36 percent and Tata Global Beverages rising 2.98 percent, on expectations that shortage of the commodity from drought-hit South Africa would lift prices next year.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)