India's broader NSE index hit its highest level in more than 10 months on Friday and its biggest weekly gain in five as expectations of a good monsoon and economic reform hopes continued to support auto and consumer goods stocks. The NSE index ended up 0.49 percent at 8,328.35, after earlier rising as much as 0.83 percent to its highest since August 20, 2015.
The benchmark BSE index closed up 0.54 percent at 27,144.91, after earlier touching its highest since October 27, 2015. For the week, the NSE index rose 2.5 percent while the BSE index gained 2.8 percent, their biggest weekly gains since the week ended on May 27. Markets around the world also seemed to have rebounded, with European markets rallying for the third straight session.
A business survey on Friday showed India's manufacturing growth rose to its highest in three months, driven by stronger demand, although firms barely raised prices, leaving the door open for another rate cut by the central bank this year. Foreign investors had bought a modest $63.4 million in Indian shares this week as of Wednesday, after selling $84.90 million last Friday, the day after the Brexit vote.
"The markets have taken cognisance of the fact that major central bankers are quite ready to take action in case of financial concerns in the market," said Saurabh Jain, assistant vice president of research at SMC Global Securities. The government's move to open up FDI, federal staff wage hike, an extended monsoon forecast and hopes of tax reforms are helping the recovery, Jain added. The rally was led by consumer goods companies and automakers, with the Nifty FMCG index and the Nifty Auto index gaining 3.04 percent and 5.93 percent this week, respectively.
ITC Ltd rose 3.64 percent and was up about 7 percent on the week. Auto stocks such as Hero MotoCorp and TVS Motor Co gained between 4 percent and 5 percent this week. Mumbai-based cooking gas supplier Mahanagar Gas Ltd surged as much as 30.4 pct on its market debut. Larsen & Toubro was up 2.8 percent after the Economic Times reported the defence ministry finalised an artillery gun contract with the company. Software firm KPIT Technologies, which was among the top losers on the NSE, slumped as much as 14.60 percent to its lowest since May 9, after it forecast lower Q1 revenue.
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