Markets surge: Indian shares set for five-year weekly high on West Asia truce

Indian shares rose on Friday in a broad-based rally led by financial stocks, putting benchmark indexes on course for their best week in more than five years, as investors took comfort from a fragile ceasefire between the US and Iran.

Washington accused Tehran of breaching commitments related to the Strait of Hormuz, while Israel carried out strikes in Lebanon that Iran said violated the truce. The two sides are scheduled to hold talks in Pakistan on Saturday.

The Nifty 50 climbed 1.02 per cent to 24,019.35 and the Sensex added 1.07 per cent to 77,446.44 as of 10:25 am IST.

Both indexes have gained about 5.7 per cent so far this week, positioning them to break a six-week losing streak.

Crude prices have declined about 11.5 per cent this week to $96 a barrel, while the rupee has strengthened 0.5 per cent, supported by central bank measures and the ceasefire. India imports the bulk of its crude and gas requirements.

“The ceasefire has reduced near-term geopolitical uncertainty, while the drop in crude prices is a key positive for sentiment, as it eases India’s inflationary pressures,” said Ajay Menon, managing director and chief executive of wealth management at Motilal Oswal.

“However, the sustainability of the rally will depend on progress in Iran-U.S. negotiations,” Menon said.

The small-cap and mid-cap indexes rose about 1.6 per cent and 0.9 per cent, respectively, while 13 of the 16 major sectors advanced on Friday.

Among individual stocks, index-heavyweights HDFC Bank and ICICI Bank gained 1.7 per cent and 3.2 per cent, respectively, while Reliance Industries rose 1.5 per cent.

Shares of Tata Consultancy Services fell 3 per cent after reporting a decline in full-year dollar revenue, pulling the IT index down 2.5 per cent.

Wipro rose 2 per cent after the company said it would consider a proposal for a share buyback.

Financial stocks, which carry the highest weight on the benchmarks, have risen 8.8 per cent this week and are set to end a six-week losing streak triggered by record foreign outflows.

(With inputs from Reuters)