India’s Nifty 50 hits record high as investors bet on earnings growth recovery

India’s benchmark Nifty 50 index scaled record highs on Friday in a broad-based rally led by financials, metals, and automobile stocks on prospects of a strong earnings growth in the December quarter.

The Nifty 50 hit a record high of 26,340 before ending up 0.7% at an all-time closing high level of 26,328.55. The BSE Sensex added 0.67% to 85,762.01. For the week, the indexes gained 1.1% and 0.9%, respectively.

India’s stock market scaled new heights on a day when shares in Europe and the U.K. too marked record levels in a positive start to trading in the New Year.

Fourteen of the 16 major sectors rose this week, with sub-indexes for banks, metals and automobile stocks hitting record highs too. The broader small-caps and mid-caps added 0.8% and 1.7%.

“We saw benchmarks struggle to sustain near record high levels in November and early December. Whether they hold on to these levels this time will be determined by quarterly earnings and the Union Budget,” said Kranthi Bathini, director of equity strategy at WealthMills Securities.

Heavyweight bank stocks rose 1.9% for the week on optimism over strong loan growth and asset quality.

Metal stocks jumped 5.7% for the week, driven by the government’s safeguard duty on some steel products to curb cheap imports from China and on rising commodity prices.

Automobile stocks added 3.8%, boosted by strong December sales. Commercial vehicles maker Ashok Leyland jumped 8.1%, while two-wheeler companies Hero MotoCorp , Bajaj Auto, and TVS Motor gained 4.8%-5.9%.

ITC fell 3.8% on the day and 13.4% for the week, as investors worried about earnings pressure from higher taxes on cigarettes. The stock dragged the fast-moving consumer goods index 3.7% lower through Friday.

Coal India surged 6.9% on the day and was the top Nifty gainer after it allowed direct participation of foreign coal buyers from some countries in its e-auctions amid a decline in local demand for power generation.