Indian shares ended 2.1 percent higher on Friday, posting their biggest single-session rise in nearly nine weeks, led by gains in ICICI Bank, as risk appetite improved globally after Greece averted the immediate risk of a debt default. However, the rise in local stocks is seen as short-lived, with the main index falling for the third week, after the ruling Congress party's loss in state elections hit hopes of renewed efforts to launch reforms and reverse a slowdown in growth.
"Ahead of the monetary policy and budget, the market is expected to have some stabilisation and that is what I am seeing right now," said Deven Choksey, chief executive at K R Choksey Shares and Securities in Mumbai. The benchmark 30-share BSE index closed up 2.09 percent, its biggest rise since January 10, at 17,503.24 points, with 23 of its components gaining.
The index has lost nearly 0.8 percent this week. The markets were shut on Thursday for a public holiday. "This is a bounceback. The rise is in line with the international markets, and since we were closed for a day in between we are catching up on that," said Ambareesh Baliga, chief operating officer at Mumbai's Way2Wealth Securities. The government could announce a populous budget, which could be "disastrous" for the economy and the markets, he said.
ICICI Bank, the country's No 2 lender, rose 6.28 percent and bigger rival State Bank of India gained 3.96 percent on hopes of another cut to the cash reserve ratio, or the proportion of deposits that banks must keep with the central bank. HDFC Bank, India's third largest lender by assets, also closed up 1.46 percent. The RBI had cut the CRR by 50 basis points to 5.5 percent on January 24 but kept its key policy rate unchanged.
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