Indian equities surged for the second consecutive session on Friday, with the rupee posting its single biggest daily gain since September 2012. However, the rally on Friday was not enough to erase losses accrued over the week as the benchmark equity indices posted their fifth straight weekly decline.
The rupee recovered over 2% on Friday from a record low it touched the previous day. Finance minister P Chidambaram had said on Thursday that the currency was ?undervalued?.
On Friday, the Sensex ended at 18,519.44, up 206.50 points, or 1.13%, while the Nifty gained 63.30 points, or 1.17%, to end at 5,471.75. For the week, however, the Sensex lost about 0.5% and Nifty lost around 0.7% from the previous week. In the last one month, the Sensex is down 8.8%, while the Nifty is down almost 10%.
The losses in broader markets were steeper, with the BSE Mid-Cap index losing 1.5% week-on-week, and the Small-Cap index losing about 0.5% from the previous week.
Sectors like real estate, automobiles, capital goods, consumer durables, and healthcare ? each losing around 2.5-4% during the week ? did most of the damage to Indian equities. However, the losses were limited due to a sharp 12.5% gain in the BSE Metals index and a 1.5% jump in CNX IT index.
Tata Steel gained the most during the week, with the scrip rising 20%. Other gainers include Sterlite and Jindal Steel & Power, and Hindalco ? all gaining 11-16% during the week as Chinese manufacturing data showed improvement suggesting a pick up in global metal demand.
Bharti (-8.1%) was the biggest loser in the week. Other major losers included NPTC (-7.6%), Sun Pharma (-6.4%), Cipla (-4.4%), Hero Motocorp (-4.1%), Tata Motors (-4%), ITC (-3.7%), Baja Auto (-3.6%) and Mahindra & Mahindra (-3.05%).
CNX Bank Nifty, which was heavily beaten down in the previous six weeks, posted marginal gains of 0.2% for the week as the RBI provided banks some relief on account of the potential mark-to-market hit they were facing due to the rise in bond yields.
Investors also indulged in bottom-fishing in banking stocks, which are now available at attractive valuation. Resilience in global equities and reports suggesting improvement in US economic growth also lent support to Indian markets.
The week also saw selling by foreign institutional investors (FIIs) for the first time in two weeks. For the current week, FIIs net sold over $500 million of Indian equities, provisional data show. In contrast, FIIs had bought shares worth $47.35 million last week.
On the other hand, domestic institutional investors (DIIs) aggressively bought Indian shares, with their tally rising to R3,360 crore ($526.7 million), as against R1,355 crore ($220.8 million) last week and R151 crore ($24.8 million) in the week prior.
Market experts said the selling in equities was overdone and valuations had fallen to such low levels that fundamental and technical factors would play a huge role in recovery of stock prices.
?We do not see the market correcting further. After the steep fall since the second week of July, valuations have touched multi-year lows. Similarly, we do not see the rupee depreciating further, or falling drastically from the current levels. There are technical factors working against the currency depreciation,? said an institutional dealer at a foreign-based brokerage.
