Indian shares ended higher on Friday, after the government announced higher rural spending as well as tax exemptions in its last budget before the general elections due by May. Shares of India's Vedanta Ltd slumped to a two-and-a-half-year low on Friday after analysts expressed concerns over an investment by the parent company of the conglomerate in African miner Anglo American.
The benchmark BSE index closed up 0.59 percent at 36,469.43, recording a weekly gain of 1.23 percent. The broader NSE index ended 0.58 percent higher at 10,893.65, gaining 1.05 percent for the week.
The 10-year benchmark government bond yield rose to 7.62 percent, having risen as much as 16 basis points from 7.49 percent pre-budget, while the rupee was weaker at 71.28 to the dollar, compared to the pre-budget level of 71.18.
The Nifty Auto index surged 2.7 percent with Hero MotoCorp and Maruti Suzuki Ltd rising 7.39 percent and 4.84 percent, respectively.
However, state-run lenders including State Bank of India Ltd, which reported its quarterly results earlier in the session, closed 3.15 percent lower, while Punjab National Bank declined 4.65 percent.
Vedanta saidon Thursday its foreign unit Cairn India Holdings Ltd had paid $200 million to buy a stake in Anglo American from Volcan Investments Ltd, the miner's parent company, as a part of its "cash management activities".
The miner's returns from the deal depends on Anglo American's stock price and returns are not guaranteed, Morgan Stanley said in a note.
"While there is some downside protection for Vedanta in specific scenarios (not clarified by the management), returns are not guaranteed," Morgan Stanley said.
The stock slumped as much as 19.86 percent on Friday, the largest intraday fall since October 2008. More than 74 million shares - 7.4 times its 30-day average - had changed hands by early afternoon, making it the most-heavily traded security on the NSE index.
Industry players too have speculated that Agarwal, who controls about a fifth of Anglo American, wants some form of a tie-up with the global miner.
In September last year, Vedanta Resources' Chairman Anil Agarwal's decision to take the London-listed miner private was seen by some as a prelude to a potentially broader deal with bigger miner Anglo American.
Kotak's analysts in a note said that while Vedanta stated the investment is to earn higher returns, they fail to see merit in the arrangement.
Industrial metals prices are set for their biggest annual fall in years after signs of slowing growth in China's commodities-hungry economy and a US-China trade war, potentially affecting global mining firms. Vedanta on Thursday posted a 21.1 percent decline in third-quarter profit that still beat estimates.
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