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Markets ended the week on a positive note with key benchmark indices posting over a per cent gains on back of surge in overseas inflows.
Risk appetite improved on hopes of aggressive rate-cut by the Reserve Bank of India in its monetary policy next week after headline inflation eased to 3-year low in March.
“So as inflation comes down, there is case for RBI to cut interest rate. I think, we have a case for stronger growth,” said Raghuram Rajan, Chief Economic Advisor at an event in New Delhi on Friday.
Meanwhile the recent declines in oil and gold prices which form a hefty part of India’s import bill, will help curb the burgeoning current account deficit, thereby stoking hopes of reduction in interest rates at the RBI's annual policy review on May 3.
For the week, the Bombay Stock Exchange's 30-share index Sensex rose 1.4 per cent or 270 points points to end at 19,286.72 while the National Stock Exchange's 50-share Nifty gained 44.85 points or 1.5 per cent at 5,871.45.
Domestically, key sectoral indices such as banks, capital goods, consumer durables, auto and power surged between 2-4 per cent while IT dragged posting a drop of nearly 5% for the week on the BSE.
Broader markets also gained, moving in-line with benchmark indices and posted a gain of nearly 1 per cent for the week.
Global stock markets gained for the week after Group of 20 leaders supported economic initiatives taken by the Bank of Japan to combat deflation and not weaken its currency for trade reasons, deflecting talk of a currency war.
Adding to the optimism was European Central Bank meet next Thursday amid expectations the central bank will react to the recent deterioration in euro zone's economy by cutting interest rates next Thursday.
US markets posted gains for the week with the Standard & Poor's 500 rising 1.7 percent, the Dow Jones Industrial Average was up 1.1 percent and Nasdaq Composite Index rose 2.3 percent.
Moreover European indices too ended comfortably higher for the week. The FTSEurofirst was just about on track for its best week since November, as too was oil. Gold, which last week saw its biggest daily fall on record, was heading for its best week since Jan 2012.
MOVERS & SHAKERS
Maruti Suzuki India surged 10 percent after country's largest car maker reported 79.4% jump in its standalone net profit for the quarter ended March 31 at Rs 1,147.5 crore, mainly on the account of good sales of models like Ertiga, DZire and Swift.
Axis Bank gained 4% after the bank posts better-than-expected March quarter results on Wednesday.
Reliance Industries added 1.4 per cent after the Cabinet Committee on Investment (CCI) cleared 25 exploration and production blocks out of the 31 blocks where work had been stalled on account of security restrictions imposed by the ministry of defence.
OUTLOOK
Markets are expected to trade cautiously next week ahead of RBI monetary policy.
“Markets have already moved up sharply over the past fortnight. We advise investors to concentrate on companies with strong balance sheets and robust corporate governance and be watchful of any event that would trigger risk aversion leading to flow of funds out of emerging markets including India,” said Dipen Shah, head of private client group research at Kotak Securities.
Domestically, the fiscal deficit data for March on Tuesday, RBI macro-economic review on Thursday and annual monetary policy on Friday will be watched out for.
In the earnings calendar, we have Hindustan Unilever (Monday), Bharti Airtel (Thursday) and Ambuja Cements, ACC results (Friday).
Globally, US consumer confidence on April 30 and Federal Reserve Interest Rate Decision coupled with ISM Manufacturing PMI on May 1 which will be crucial.
In Europe, the European Central Bank rate cut decision on May 2 may influence the volatility of EUR and determine a short-term positive or negative trend.
