By Bharath Rajeswaran
(Reuters) -India’s equity benchmarks inched higher on Friday and logged weekly gains, led by banks after the regulator announced a raft of lending reforms and as metals advanced on dollar weakness.
The Nifty 50 rose 0.23% to 24,894.25, while the BSE Sensex added 0.28% to 81,207.17.
The indexes rose about 1% in the week, led by high-weight banks, state-owned lenders and private banks which rose 2.2%, 4.4% and 2.5%, respectively, after the Reserve Bank of India on Wednesday eased rules for lending to capital markets and large companies.
The RBI, which maintained rates as expected, also detailed plans to increase limits on lending against shares and reduce risk weights for non-bank lenders for infrastructure projects.
“The status quo on rates is a relief for banks as a rate cut would have led to contraction of net interest margins, while the relaxation of restrictions on bank loans will aid credit growth,” said Prakhar Sharma and Vinayak Agrawal, equity analysts at Jefferies.
Metals rose 1.8% on the day to a record high, lifting weekly gains to 3.9%, supported by a weaker dollar on firming October U.S. rate cut bets and supply disruptions. [MET/L]
The broader small-caps and mid-caps rose 1.8% and 2% this week.
Among individual stocks, Tata Motors rose 6.4%, marking its best week in nearly five months, after setting the effective date for the demerger of its truck and bus unit from the passenger vehicle business.
Sentiment was further lifted as Tata’s luxury arm JLR announced a phased resumption of operations following a month-long shutdown.
On the day, V-Mart Retail and Sai Silks surged 16% and 18.4% after strong quarterly business updates.
The drivers for the next leg of the rally will be global liquidity and corporate earnings that kick off next week, said Sonam Srivastava, founder and fund manager at Wright Research PMS.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema, Janane Venkatraman and Mrigank Dhaniwala)
