The 30-share Sensex gained 173.47 points, or 0.86%, to close at 20,336.82 points, while the NSEs Nifty ended 47.25 points, or 0.79% higher, to settle at 6,048.35 points on Friday. The rally was also on account of wholesale-price index (WPI) inflation falling to an eight-month low of 5.05%.
For the week, the Sensex lost nine points, or 0.04%, while the Nifty was down 14 points, or 0.2%. Incidentally, on Thursday, the Sensex fell to its lowest level in more than four months owing to a 0.6% y-o-y decrease in the Index of Industrial Production (IIP) index. The 30-share index was down 255.14 points.
On Friday, foreign institutional investors (FIIs) sold $2.55 million worth of equities, while domestic institutional investors (DIIs) sold $7.25 million, according to provisional BSE data. FIIs have sold $241.28 million worth of equities in the current calendar year. In February, FIIs are net sellers at $228.5 million, while, in January, they had sold $12.78 million worth of Indian equities.
Fridays market rally was led by Tata Motors (3.25%), Gail (2.56%) and RIL (1.74%). Brokerages have raised their target price on Tata Motors after the automaker reported a 195% y-o-y rise in its net profit to R4,804.80 crore in Q3.
Other Asian markets showed a mixed trend on Friday. The Hang Seng (0.60%), Kospi (0.69%) and Shanghai Composite (0.83%) ended in the green. However, the Nikkei was down 1.53%. Among major European indices, FTSE 100 (0.08%), DAX (0.54%) and CAC (0.43%) were trading in the green at 6.30 pm IST.
Back home, 21 of the 30 Sensex stocks advanced. However, in broader markets, the breadth was weak with 1,400 declines as against 1,185 advances. Most of the 12 sectoral indices ended in the green. BSE Oil & Gas (1.21%), BSE IT (1.39%) and BSE Metal (0.70%) were the major gainers.
Market participants feel the recent rally is on account of positive global and domestic cues. We are seeing improvement in Chinese macro data as well as domestically, political uncertainty is easing as opinion polls are pointing in the same direction," said Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital.
On Wednesday, Chinese trade data showed that exports rose 10.6% in January from a year earlier, while imports jumped 10%, leaving the country with a trade surplus of $31.9 billion for January. On Thursday, an opinion poll showed that a BJP-led coalition would win 227 seats in the upcoming general elections.
Apart from this, analysts feel the rupees stability amid decline in emerging market currencies shows that the fundamentals are strong. The INR has held up comparatively well in recent weeks, despite the weakness seen by other EM current account deficit currencies. It is an encouraging sign that the INRs vulnerability to contagion has fallen from last year and we maintain our year-end USD-INR forecast of 62. The reasons include Indias improving current account position, tighter monetary policy and proactive measures to increase FX cover, said HSBC in a research note on Friday.