After crashing nearly 1,000 points in the first two trading sessions of the week, the markets saw a sharp recovery in the last two trading sessions.
The S&P BSE Sensex settled 373 points higher on Friday at 38,091.
In the last two trading sessions of the week, the 30-share index moved up around 678 points, or 1.81 per cent, while the NSE's Nifty50 index added 227 points, or 2.01 per cent, to end at 11,515 levels.
On a weekly basis, the 30-share index of BSE lost 299 points or 0.77 per cent while the Nifty50 index shed 74 points or 0.63 per cent.
"Ease in inflation and recovery in rupee added optimism in the market. Stability in yield and rupee will be crucial for the market momentum while investors have continued to stay cautious due to global triggers. The global peers also traded on a positive note in expectation of ease in trade tensions between US & China. Any redressal in tensions will provide enough headroom for domestic market," said Vinod Nair, Head of Research, Geojit Financial Services.
Here're four key reasons that led to the market recovering some lost ground:
Rupee recovery & PM's economic review meet
Prime Minister Narendra Modi is likely to hold an economic review meeting at 6:30 pm on Friday. The news gave the much-needed impetus to the rupee as well as equity markets. In two days, the rupee has recovered 1.5 per cent to 71.83 after punging to an all-time low of 72.91 in the intraday trade on Wednesday. The meeting is likely to focus on finding out ways to stem the rupee's fall against the US dollar.
Encouraging macro-ecconomic data
A slew of encouraging macro numbers brought cheer to the investors on Dalal Street. The headline inflation (CPI) data cooled off to a 10-month low of 3.69 per cent in August, while the wholsesale price inflation (WPI) eased to a four-month low of 4.53 per cent in August on softening of prices of food articles, especially vegetables. That apart, industrial production (IIP) for July grew at 6.6 per cent on the back of good performance by the manufacturing sector and higher offtake of capital goods and consumer durables. Trade deficit, too, narrowed to $17.4 billion in August as compared to $18.02 billion in July, data showed.
Firm global cues
Shares rose around the world on Friday as expectations grew that the United States (US) and China would open new trade talks, while an interest rate hike in Turkey supported the Turkish lira and global risk appetite. The MSCI All-Country World index, which tracks shares in 47 countries, was up nearly half a percent on the day after the start of trade in Europe. Led by technology and autos stocks, the pan-European STOXX 600 index rose half a per cent, set for its best weekly gains in seven weeks. US stocks closed higher Thursday, with the S&P 500 gaining for a fourth straight session on the back of strong technology shares.
Fall in oil prices
Oil prices fell more than 2 per cent on Thursday, with Brent slipping back from four-month high, as investors focused on the risk that emerging market (EM) crises and trade disputes could dent demand even as supply tightens. However, it ragained some lost ground on Friday.