Indian shares post highest weekly close in five weeks

Indian shares rose to their highest weekly close in five weeks on Friday, on hopes renewed policy reforms by the government and easing inflation will give a much needed boost to the country's slowing economy. Analysts said that a decline in inflation could give the central bank much-needed headroom to unwind its tight monetary policy and boost corporate investment crimped by high interest rates.
Banks were among the gainers, with the country's top lender State Bank of India and rival ICICI Bank rising 0.66 percent and 1.03 percent respectively, on expectations of an easing interest rate cycle. The banking index rose 0.5 percent. The main 30-share BSE index ended up 0.73 percent, or 117.11 points, at 16,154.62, with 20 of its components in the green. The benchmark was one of the world's worst performers in 2011, falling almost a quarter.
The 50-share NSE index was up 0.72 percent at 4,866 points. In the broader market, gainers overwhelmed losers 1,034 to 440 on total volume of about 833.7 million shares. Coal India, the world's largest coal miner, rose 5.6 percent after it said it will sign a five-year agreement with its worker unions to increase wages by 25 percent as against 30-40 percent demanded. This was the stock's highest single day percentage gain since July 27 last year.
Tata Steel rose to its highest in over two months, up 6.9 percent at 415.7 rupees, as buyers chased bargains in blue chips. Tata Motors rose 1.26 percent. Wind turbine maker Suzlon Energy rose 8.7 percent after the company won a 20.5 megawatt UK order. Two wheeler makers Hero Motocorp and Bajaj Auto fell 1.07 percent and 3 percent after brokerage CLSA cut it's motorcycle industry growth forecast for FY13 from 14 percent to 8 percent.
CLSA has downgraded Hero Motocorp to 'sell' from 'under-perform' and has cut its target price to 1,650 rupee from 1,970 rupees. It has also cut Bajaj Auto's target price to 1,430 rupees from 1,625 rupees, while maintaining an 'under-perform' rating. Tech bellwether Infosys Ltd added to Thursday's losses falling as much as 1.4 percent before closing down 0.16 percent at 2,584.20 rupees. Larger rival Tata Consultancy Ltd, which will report earnings next week, also fell 0.34 percent.