Equity benchmarks finished higher but posted some gains earlier in the session, with the Sensex index closing below 60,000 points after hitting that level earlier in the day, driven by a broader rally in risky assets.
Assets considered to have improved market sentiment helped risky bets towards the end of the week, reflected in broad gains in global equities, particularly European equities, and a weakening dollar.
Even bruised cryptocurrencies rose at the expense of the dollar, with bitcoin back above $20,000 and up 7 percent.
The 30-share BSE Sensex index reached an intra-day high of 60,119.80 earlier in the session, but ended Friday below that mark with gains of 104.92 points, or 0.18 percent to 59,793.14 and the broader NSE Nifty-50 index climbed 34.60 points, or 0.19 percent, to 17,833.35.
With gains on Friday, stock benchmarks ended higher for the second session in a row. Indian stocks ended at a three-week high, posting their first weekly climb in three, led by strong buys in technology stocks. For the full year, the Nifty 50 is up nearly 3 percent.
With a 2.4 percent gain for heavyweight Infosys, the Nifty IT index gained 2.2 percent and closed at its highest level in more than two weeks, making it the best-performing sub-index on Friday.
To increase supply and reduce local costs, India, the world’s largest rice exporter, has restricted its exports of broken rice and is imposing a 20 percent export tax on sales of certain varieties abroad.
Rain Industries had its worst day since June 20, closing 7.7 percent lower after the carbon and advanced materials manufacturer said a European plant would temporarily close in anticipation of expected natural gas shortages and price hikes.
Markets are now looking at data expected Monday, which likely shows retail inflation ended a quarterly downward trend to rebound to nearly 7 percent in August as food costs rose, according to a Reuter survey of economists.
Foreign investors are again putting a lot of money into the domestic market because they believe that the Indian economy will grow faster than its competitors worldwide, despite warnings from analysts about overvalues.
“Both the Sensex and Nifty indices gained 1.7 percent last week. Indian markets were supported by falling crude oil prices and a decline in domestic bond yields. Autos were the biggest losers in the week, while banks, capital goods and healthcare were the biggest gainers among the major sectors,” said Shrikant Chouhan, head of Equity Research for Retail at Kotak Securities.
A broad rally in risk assets pushed the dollar downward, with the US currency heading for its first weekly decline in four weeks, as investors watched US inflation data early next week.
Indeed, the dollar index, which compares the dollar’s performance against six major counterparts, fell 1 percent Friday and traded at 108,400. The currency lost ground overall and was set for a weekly decline of 1.1 percent, the first decline in a month or so.
Global equities were on track to post their first weekly gains in four weeks, providing some relief from bear market warning signs circling markets due to monetary tightening, energy problems and China’s economy slowing from the COVID-19 shutdown.
That even as Federal Reserve chairman Jerome Powell confirmed an aggressive policy path.
“The markets have finally understood that yields will almost certainly rise 75 basis points when the Fed takes the next step,” JoAnne Feeney, partner and portfolio manager of Advisors Capital Management, told Bloomberg TV.
“What we’re seeing, however, is some acknowledgment that the sell-off we saw in the second half of August may have been a little over the top,” she said.
On the other hand, Bank of America strategists warned that investors are fleeing US equities as the likelihood of an economic slowdown rise amid several dangers, in contrast to bullish stock markets on Friday, Bloomberg reported.
According to EPFR Global data released by the bank, US equity funds saw $10.9 billion outflows in the week ending Sept. 7. This was the largest outflow in 11 weeks and was driven by technology stocks.
Still, Wall Street’s major indices posted small gains overnight, pushing the S&P 500 above 4,000 points for the first time since late August.
In Asia, the MSCI index of Asia-Pacific stocks outside Japan rose to its highest in two weeks, and the strongest suggestion yet from Japanese officials about possible direct market intervention in response to the weakness of the yen sent the currency his best day in a month.
One of the big winners was the euro, which jumped 1.1 percent to a three-week high of $1.01105, a day after the European Central Bank raised its key rate by a record 75 basis points (bps) hinting on more in the future.
“This is clearly an interest rate differential story,” Samy Chaar, chief economist at Lombard Odier, told Reuters. “We have yields in Europe that are still well supported after the ECB, which was – as expected – aggressive across all policy instruments. And on the other hand, US interest rates are falling somewhat.
“If we put those two together, that’s probably what caused the dollar’s pullback,” he added.
Yet the death of Queen Elizabeth II, which sparked an outpouring of sympathy from around the world, overshadowed market movements on Friday.
On the other hand, the rupee rose sharply on Friday to hold its ground, extending its weekly winning streak for the second week in a row.
The Indian currency hit a month-long high of 79.57 earlier in the day, closing the week up about 0.2 percent, its best performance in seven weeks.