Sensex caps biggest weekly gain since 2011

Benchmark stock gauge capped its best week in four years as foreign investors increased their holdings and the rupee strengthened.

State Bank of India and ICICI Bank, the country's two biggest lenders, were the gauge's top performers for the week with gains of 21 per cent and 19 per cent. Tata Motors, the owner of Jaguar Land Rover, rose to a six-week high. Bharat Heavy Electricals, largest power-equipment maker, was the top gainer on the S&P BSE Sensex on Friday.

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The Sensex climbed 6.4 per cent from February 26, the most since the week ended December 2, 2011. It rose 0.2 per cent to close at 24,646.48 in Mumbai on Friday, after changing direction at least 20 times. Global funds bought a net $860 million of local stocks in the first three days of March, paring the year's outflows to $2 billion. The rupee completed its biggest weekly advance since September 2013. Markets will be shut Monday for a local holiday.

"After a tear away rally we can see some consolidation, and we have the extended weekend coming up," Paras Bothra, a Mumbai- based vice president of equity research at Ashika Stock Broking, said in an interview. "The rally was on the back of the fiscal consolidation in the Budget and the good news is that global markets are stabilising and foreign inflows are coming back." He is advising clients to buy shares of consumer-goods companies.

Rupee gains
A rebound in oil prices, improvements in US economic data and optimism that China will increase stimulus to spur growth have helped revive appetite for emerging-market assets. The rupee has rallied 2.2. per cent this week and was up 0.3 per cent at 67.14 a dollar as of 4:24 p.m. in Mumbai, according to prices from local banks compiled by Bloomberg.

Finance minister Arun Jaitley in Monday's budget affirmed the government's goal of cutting the fiscal deficit to a nine- year low of 3.5 per cent of gross domestic product in the year starting April 1. The administration plans to boost spending on roads, ports, power plants and other public projects, while increasing allocation to a rural jobs program.

Bharat Heavy Electricals surged 4.2 per cent on Friday to end the week with a 13 per cent gain, its biggest since May 2014. The stock is still this year's worst performer on the Sensex, having lost 36 per cent. Tata Motors jumped 14 per cent this week, trimming 2016's drop to 12 per cent. Tata Steel climbed 16 per cent.

Lenders jumped this week after the central bank eased rules allowing them to bolster capital ratios. State Bank of India increased 3.1 per cent in a sixth day of gains Friday to cap its best week since May 2009. ICICI Bank's 19 per cent surge and the S&P BSE India Bank Index's 12 per cent advance also were the biggest since May 2009.

Nifty options
The NSE Nifty 50 Index added 0.1 per cent Friday and 6.5 per cent during the week to 7,485.35, its highest close in a month. The Nifty 7,500 calls have the biggest open interest among bullish options, which signals that the index will find it tough to cross that zone, according to Motilal Oswal Securities.

"Futures and options positions signal that markets could take a pause at these levels," Rikesh Parikh, vice president at Motilal Oswal in Mumbai, said in a phone interview. "Most investors couldn't capitalize on the swift upmove and are waiting for fresh cues."

Despite this week's rally, the Sensex has lost 5.6 per cent this year as global funds dumpedlocal shares amid a selloff in emerging-market assets. The gauge trades at 15.1 times its 12-month projected earnings, compared with 12.7 times for the MSCI AC Asia Pacific Index.