MUMBAI: Indian shares rose more than 1 percent on Friday to mark their second consecutive day of gains, with beaten down bank shares such as ICICI Bank gaining on value buying, as rupee recovered after six straight days of losses.
The rupee, the strength of which is crucial for a potential rollback of the RBI's liquidity tightening measures, recovered from a record low hit on Thursday after finance minister said the currency was "undervalued".
The gains also tracked the easing of an emerging markets rout, while global shares headed for a second day of gains as data suggesting the global economy is improving took the edge off concerns about the impact of a cut in US monetary stimulus.
However, traders remained wary about foreign flows after overseas investors sold a net $701.4 million worth of shares in the five sessions through Thursday, ahead of June quarter GDP data and the expiry of August derivatives contracts next week.
"The market recovered on good volumes as the rupee started rising after the finance Minister's comments, but the market can give deceptive moves ahead of derivatives expiry, hence cautious approach required," said Kishor P. Ostwal, chairman and managing director of CNI Research Ltd.
The benchmark BSE index rose 1.13 percent, or 206.50 points, to end at 18,519.44. The index fell 0.42 percent for the week, marking its fifth consecutive weekly fall.
The broader NSE index rose 1.17 percent, or 63.30 points, to end at 5,471.75, but was 0.65 percent lower for the week.
Beaten down banking stocks surged on value buying and hopes of more measures by the government to support the economy, dealers said.
NSE bank index gained 2.17 percent led by ICICI Bank Ltd, which rose 2.6 percent, while HDFC Bank Ltd ended 3.2 percent higher.
Reliance Industries Ltd gained 1.7 percent after it and British oil company BP Plc announced a new gas condensate discovery off the east coast of India in the Cauvery basin.
Shares in metal companies continued to gain for a second day following a positive reading on China's manufacturing sector on Thursday.
Jindal Steel and Power Ltd rose 4.2 percent, while Tata Steel Ltd gained 3 percent adding to Thursday's 10.5 percent gain.
However, among stocks that fell, Cipla Ltd declined 1.4 percent due to the lack of any major announcements in its annual shareholders meeting on Thursday. For additional stocks on the move double click
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