Indian shares gained 0.4 percent on Friday, snapping a three-day losing streak, helped by firmer Asian and European peers and a fall in oil prices. But, the benchmark index closed 2.8 percent lower on the week, after posting its biggest one-day slide in 16 months on Thursday, spooked by a jump in world oil prices.
"The fall in oil price prompted the market bounce today and other regions like Europe and Asia were stable as well, pushing the Sensex into positive territory," Gajendra Nagpal, CEO of Unicon Financial said. India imports about 80 percent of the oil it consumes and the global price spiral could add to New Delhi's woes of tackling high food inflation.
The government is expected to boost spending on social programmes in a populist budget on Monday, even as India is threatened with a potentially ballooning subsidy bill for food and fuel.
"There was a cheer up initially as oil prices fell, but the Libya overhang is still there. The problem is not solved yet and there is concern about it spreading to other countries," said Neeraj Dewan, director of Quantum Securities. The 30-share BSE index rose 68.50 points to 17700.91, with 13 components advancing.
Financials, which had fallen sharply on Thursday amid worries inflation pressures would trigger more rate increases, led the gains. Top lender State Bank of India rose 2.1 percent and rival ICICI Bank firmed 3.5 percent. The main index is down 13.7 percent year-to-date, with foreign funds withdrawing $1.6 billion this year until February 23.
Auto shares were down on fears the annual budget may increase taxes on the sector, with leading car maker Maruti Suzuki down 0.2 percent and utility vehicle and tractor maker Mahindra & Mahindra down 3.4 percent. Metals shares fell as copper remained on course for its biggest weekly loss since August 2010, fuelled by worries that runaway oil prices resulting from the turmoil in North Africa will constrain global growth.
Hindalco Industries Ltd was down 2.5 percent and non-ferrous metals producer Sterlite Industries fell 2.2 percent. Three-month copper on the London Metal Exchange rose $84 to $9,589 a tonne by 0703 GMT, after having touched $9,311, a near one-month low, in the previous session.
Tata Steel closed up nearly 1 percent at 608 rupees after the company said it had signed a $469 agreement to sell some assets of Teesside Cast Products (TCP) to Thailand's SSI which will reopen the plant by end-2011, providing 700 new jobs. Reliance Communications, India's second-biggest mobile carrier, fell 5.4 percent, while sister firms Reliance Infrastructure and Reliance Power lost 4.6 and 1.6 percent respectively. Volumes stood at 267.6 million shares, with losers outpacing gainers in the ratio of 1.3:1. The 50-share NSE index closed 0.78 percent higher at 5303.55 points.
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