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New Delhi: Indian shares rose 2.2 per cent on Friday, posting their biggest weekly gain in five months, as funds bought into beaten down stocks ahead of the quarterly close.
A spike in annual inflation to a 14-month high momentarily halted the rally, with traders worried the government would push for steps to rein in prices. But the market came back strongly towards the end.
Tata Steel jumped 9.5 per cent as investors felt government intervention to check steel prices would not affect the world's No six steelmaker that now gets more than two-thirds of its revenue from overseas.
The 30-share BSE index ended up 2.22 per cent, or 355.73 points, at 16,371.29, with 23 components rising. The benchmark rose 9.2 per cent on the week, its first rise in four weeks, and the biggest gain since the week to October 28 last year when it rose 9.6 per cent.
Reliance Industries and engineering giant Larsen & Toubro led the gains.
Aggressive buying
"Both foreign and domestic funds have been buying aggressively since morning," said Ketan Dedhia, managing director at Nalanda Securities. "Only when the inflation figure came we saw a pause but then it resumed."
In the broader market, 2,329 gainers outpaced 372 losers on volume of 333.9 million shares. "Today's bounce was on good volumes and we now expect 17,400 to 17,500 in next one week," Dedhia said.
Annual inflation was at 6.68 per cent in the 12 months to March 15, higher than the previous week's 5.92 per cent. It was the highest reading since January last year when it hit a two-year high of 6.69 per cent.
The data was way above analysts forecasts of 5.96 per cent and sent the BSE index down as much 0.82 per cent at one stage as rising price pressures thwarted hopes the central bank would cut rates next month to boost economic growth.
"The market was already expecting inflation to be more than six per cent... the only thing is some people expected a rate cut, which is now a distant possibility," said Rajesh Agarwal, director of research at CD Equisearch.
Larsen and Toubro rallied 6.2 per cent to Rs3,147.20, while Infosys gained 5.9 per cent to Rs1,526.35.
The 50-share NSE index was up 2.31 per cent at 4,942.
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