Sensex logs biggest weekly gains in 8 months

ICICI Bank and NTPC rose at least 3.6%, pacing gains in the benchmark gauge

The Sensex completed its steepest weekly advance in eight months as overseas investors boosted purchases of local shares. Lenders and power companies paced the rally.

ICICI Bank and NTPC rose at least 3.6 per cent, pacing gains in the benchmark gauge. The Sensex rose 0.6 per cent on Friday, taking its weekly advance to 3.4 per cent, the most since May 2016. Eleven of the 13 sector indexes compiled by BSE advanced, led by the S&P BSE Power index.

"The return of foreign flows is cheering the markets as local funds, which supported the stocks when overseas investors sold, continue to buy," said Hemen Kapadia, a Mumbai-based senior vice-president for institutional equities at K R Choksey Shares & Securities Pvt. This trend will continue for "some time," he said.

Overseas investors bought $101 million of local shares in the five days through January 20, the first purchase for the period in six weeks. They pulled out nearly $4 billion in the last two months amid a selloff in emerging markets after the US presidential election and concern that India's decision to scrap 86 per cent of its currency bills would slow economic growth.

India's Federal Budget presentation on February 1 will be "a major event" and will decide the direction of the flows for the year, according to Kapadia. Local funds purchased nearly Rs 23,000 crore ($3.4 billion) of stocks in the last two months, according to data compiled by Bloomberg.

The Sensex has held its 200-day moving average after breaking above the level on January 10. The gauge rallied more than 13 per cent in four months the last time it broke and held above its 200-day mean in May 2016.