Sensex start July series on strong note as rupee recovers; energy, financials lead

By Vishal Sridhar

(Reuters) - Indian shares bounced back on Friday after two straight days of losses, starting July derivatives series on a strong footing led by energy and financial stocks as the rupee recovered from an all-time low and Asian peers staged a pullback.

The Indian rupee, which breached the 69 per dollar mark for the first time on Thursday, recovered tracking a rebound in Asian shares and currencies. MSCI's broadest index of Asia-Pacific shares outside Japan was trading more than one percent higher.

The broader NSE Nifty was up 0.86 percent at 10,679.75 as of 0708 GMT, but was set to end lower for a second straight month. The benchmark BSE Sensex was trading 0.8 percent higher at 35,318.60.

Market Sentiment across the globe was negative over the past few weeks on worries of escalating U.S.-China trade war.

"It is going to be tough for Trump to follow through on his trade rhetoric. Given that U.S. administration is focused on market performance, crude oil prices and inflation, it's going to be tough for the U.S. to put through meaningful trade tariffs," said Sunil Sharma, chief investment officer at Sanctum Wealth Management

India is a domestic-focused economy with strong consumption trends and the economy is not showing any signs of rolling over, Sharma added.

Energy stocks led the gains on the indexes, with oil-to-telecom conglomerate Reliance Industries Ltd rising as much as 3.2 percent.

Beaten down counters such as state-run lenders recovered with the Nifty PSU Bank index gaining over 2.5 percent. The index was on track to snap a four-day losing streak.

A weaker rupee coupled with a shift in sectoral funds have helped the pharma and information technology stocks shrug off the weakness in the broader markets in June.

Metal stocks rose, with Hindalco Industries Ltd, the top percentage gainer on the NSE index, jumping more than 4 percent.

Shares of Tata Steel Ltd gained as much as 3.5 percent after key labour representatives of Thyssenkrupp on Thursday signalled their support for a planned joint venture with the Tata Group-owned steelmaker.

(Reporting by Vishal Sridhar in Bengaluru, additional reporting by Gaurav Dogra; Editing by Vyas Mohan)