BENGALURU: India’s blue-chips extended their rally to record highs for a second session in a row on Friday, led by financials, while U.S. Federal Reserve Chair’s rate cut assurance supported sentiment.
The NSE Nifty 50 and BSE Sensex gained 0.69% and 0.51% this week, respectively, posting the fourth straight weekly gain, the best such streak in three months. The benchmarks gained about 3% each in four weeks.
“The momentum in domestic equities can persist till elections as history suggests,” analysts at Ambit Capital said.
Banking is the only sector with relatively attractive valuations compared with the Nifty 50, they said.
Financials-linked indexes such as financial services, banks, public-sector banks and private banks gained between 0.6% and 4% this week.
Moody’s Ratings said on Friday that the outlook for India’s banking system is positive, a day after JP Morgan reiterated it saw no structural challenges to deposit growth in the sector.
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The broader, more domestically-focussed small-caps dropped 2.18%, while mid-caps added 0.36%, both underperforming the blue-chip indexes on persisting concerns over excessive fund inflows and stretched valuations.
“The profit growth distribution for small- and mid-caps is nothing extraordinary to warrant the elevated valuations,” Ambit Capital said.
Bajaj Auto gained 10.44%, its best week in three years. The automaker’s stock was also the top percentage gainer on the Nifty 50 this week, aided by strong sales growth in February and an ongoing 40-billion-rupee (about $483 million) share buyback.
Tata Motors rose 6.33% this week, on its plan to demerge into two listed companies that will run its commercial vehicles and passenger vehicles businesses.
On the day, the blue-chip Nifty 50 rose 0.09% to 22,493.55, while the Sensex added 0.05% to 74,119.39.
Asian markets advanced on Friday after Fed Chair Jerome Powell in a congressional testimony said that interest rate cuts can be expected in 2024.
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