Stock indices closed higher but pared some of the 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.
The assets considered that the improved market sentiment helped the risky bets at the end of the week, which was reflected in broad gains in global stocks, especially European stocks, and the dollar’s decline.
Even bruised cryptocurrencies surged at the expense of the dollar, with bitcoin back in excess of $20,000 and up 7 percent.
The 30-share BSE Sensex index hit an intraday high of 60,119.80 earlier in the session but ended Friday below that level with a gain of 104.92 points, or 0.18 percent, to 59,793.14, and the broader NSE Nifty-50 Index rose 34.60 points, or 0.19 percent to 17,833.35.
With Friday’s gains, stock indices closed higher for the second consecutive session. Indian stocks closed at their highest level in three weeks, posting their first weekly rise in three weeks, led by strong buying of technology stocks. For the year, the Nifty 50 is up about 3 percent.
With heavyweight Infosys up 2.4 percent, the Nifty IT Index rose 2.2 percent to close at its highest level in more than two weeks, making it the best-performing sub-index on Friday.
To increase supplies and reduce domestic costs, India, the world’s largest rice exporter, has restricted the export of broken rice and imposed a 20 percent export tax on the sale of certain grades abroad.
Rain Industries had its worst day since June 20 and closed 7.7 percent lower, after the carbon and advanced materials maker said a European plant would temporarily shut down in anticipation of an expected natural gas shortage and higher prices.
Markets are now eyeing data due on Monday that will likely show retail inflation ended a three-month downtrend to rise again to nearly 7 percent in August as food costs rose, according to a Reuters survey of economists.
Foreign investors are putting money heavily back into the domestic market because they believe the Indian economy will grow faster than its global peers, despite analysts’ warnings about inflated values.
“The Sensex and Nifty indices each gained 1.7 percent over the past week. Indian markets rebounded due to lower crude oil prices and declining domestic bond yields. Autos were the biggest losers for the week, while banks, capital goods and healthcare were the biggest losers,” said Shrekant Chauhan. “They were the biggest gainers among the major sectors,” said R.D., head of retail equity research at Kotak Securities.
The broad rally in risky assets pushed the dollar lower, with the greenback heading for its first weekly decline in four weeks as investors await US inflation data early next week.
In fact, the dollar index, which compares the performance of the US currency against six major peers, fell 1 percent on Friday and traded at 108,400. The currency lost ground overall and was poised for a weekly decline of 1.1 percent, the first drop in a month or so.
Global stocks were on track for their first weekly gain in four weeks, providing some relief from the warning signs of a bear market swirling around markets due to monetary tightening, energy problems and a slowing Chinese economy due to the COVID-19 shutdown.
That’s even as Federal Reserve Chairman Jerome Powell asserted a strict policy path.
“Markets are finally getting to grips with the fact that interest rates are almost certain to rise by 75 basis points when the Fed moves next,” Joanne Finney, partner and portfolio manager at Advisors Capital Management, said on Bloomberg TV.
“What we’re seeing, though, is some acknowledgment that the sell-off we saw in the second half of August may have been a bit exaggerated,” she said.
On the other hand, strategists at Bank of America warned that investors are fleeing US stocks with the increasing chance of an economic slowdown amid various risks, in contrast to the upbeat mood in stock markets on Friday, according to Bloomberg.
According to EPFR Global data released by the bank, US equity funds saw $10.9 billion in outflows in the week ended September 7. This was the largest outflow in 11 weeks and was driven by technology stocks.
However, Wall Street’s major indexes made slight gains overnight, leaving the S&P 500 index above 4,000 points for the first time since late August.
In Asia, MSCI’s index of Asia-Pacific shares outside Japan rose to a two-week high, and the strongest suggestion yet from Japanese officials about possible direct market intervention in response to a weaker yen sent the currency on its way to its best day. in a month.
The euro was among the big gainers, as it jumped 1.1 percent to a three-week high of $1.01105, a day after the European Central Bank raised its key rate by 75 basis points and hinted more to come.
“This is clearly a story of interest rate divergence,” Sami Char, chief economist at Lombard Odier, told Reuters. “We have yields in Europe that are still well supported after the ECB, and that was – as expected – bullish across all policy instruments. On the other hand, US yields are falling a bit.
“The combination of the two may be the reason behind the dollar’s decline,” he added.
However, the death of Queen Elizabeth II, which sparked an outpouring of sympathy from around the world, overshadowed market volatility on Friday.
On the other hand, the rupee rose sharply on Friday to hold its ground firmly and extended its weekly winning streak for the second week in a row.
The Indian currency hit a one-month high of 79.57 earlier in the day and closed the week with a gain of about 0.2 percent, its best performance in seven weeks.