Sensex marks biggest weekly gain in 2012

Indian shares climbed yesterday to mark their biggest weekly gain in 2012, in a rally that is mainly built on hopes that the central bank would cut rates to boost economic growth. Local stocks traded in the red for most of the day but recovered in the last hour of trade to end higher, in contrast to most Asian and European markets that fell after hopes were dashed that the world’s central banks would infuse more stimulus to revive the global economy. Expectations of additional stimulus were damped after US Federal Reserve Chairman Ben Bernanke, during his testimony before Congress Thursday, said the Fed was “prepared to take action” to help the economy, but didn’t indicate that further easing was in the offing. The Bombay Stock Exchange’s Sensitive Index ended up 69.82 points, or 0.4%, to 16,718.87, after moving between 16,485.02 and 16,767.77. The Sensex gained 4.7% this week. The National Stock Exchange’s 50-stock Nifty gained 18.70 points, or 0.4%, to end at 5,068.35, slightly below its 200-day moving average. Trading volume in the BSE’s cash segment fell to Rs19.49bn from Rs21.55bn Thursday. Gainers outnumbered decliners 1,371 to 1,357, while 118 stocks remained unchanged. Investor sentiment in India was helped by weakening oil prices. Also, local markets have seen net inflows from foreign institutional investors for previous two days, provisional figures showed. Twenty-one of the 30 Sensex stocks ended higher yesterday.The rupee completed its first weekly gain since March, snapping the longest losing streak since 2008, on speculation the central bank will lower borrowing costs this month to spur economic growth.The Reserve Bank of India has more room to cut interest rates after economic growth slowed and oil prices dropped, deputy governor Subir Gokarn said this week. On Wednesday, Prime Minister Manmohan Singh pledged measures to revive economic growth, echoing similar statements from global policy makers. China cut rates yesterday for the first time since 2008.“A rate cut will benefit the rupee as the currency needs a strong growth outlook and lower rates will work towards boosting domestic consumption,” said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong. “We expect the repurchase rate to be cut by 25 basis points at the June 18 review.”The rupee advanced 0.2% to 55.4550 per dollar in Mumbai, the first advance since the five days ended March 30, according to data compiled by Bloomberg. It fell 0.9% yesterday. India’s gross domestic product rose 5.3% last quarter from a year earlier, the least since 2003, government data showed last week. Brent crude oil has dropped 21% this quarter to $97.47 per barrel. India imports about 80% of its oil.