Fed optimism powers Indian shares to weekly gains

By Bharath Rajeswaran and Hritam Mukherjee

BENGALURU (Reuters) -Indian shares advanced on Friday, posting weekly gains, helped by a rally fuelled by investor optimism around the Federal Reserve sticking to its rate-easing stance this year.

The blue-chip NSE Nifty 50 index ended 0.39% higher at 22,096.75, while the BSE Sensex added 0.26% to close at 72,831.94.

For the week, both benchmarks logged gains of about 0.3%, led by auto and realty stocks.

"Markets are rejoicing on clarity from the Fed on rate cuts, and this will continue for a few more sessions," said Neeraj Dewan, director at Quantum Securities.

Auto stocks jumped 1.67%, taking weekly gains to 4.23%.

Mahindra and Mahindra, Maruti Suzuki, Tata Motors, Hero MotoCorp, Bajaj Auto and Eicher Motors added between 2% and 8% this week.

"The drop in Brent crude prices after hitting nearly $88 per barrel earlier in the week has aided auto stocks, for whom crude is a key raw material," Dewan said.

The Fed's dovish commentary aided domestic rate-sensitive sectors, including auto and realty, on hopes that India's central bank could begin cutting rates in the second-half of 2024, Dewan added.

Realty stocks gained 5.34% this week, while metals added 4.21%.

JSW Steel and Tata Steel jumped 4%-7.5% this week on strong China data on Monday and the fall in the U.S. dollar on Thursday after the Fed's commentary.

U.S.-rate sensitive IT stocks, however, lost 6.17% despite the positive commentary, weighed down by Accenture's revenue forecast downgrade for fiscal 2024.

Wipro, Tata Consultancy Services, HCLTech, LTIMindtree and Infosys fell 3.5%-8% for the week.

The broader small- and mid-caps rose about 1.4% each this week, outperforming the benchmarks.

"While Fed positivity spilled over to broader markets, small- and mid-caps are not out of the woods yet as high valuations still remain a concern," said Avinash Gorakshakar, head of research at Profitmart Securities.

Domestic markets will be closed on Monday for a holiday.

(Reporting by Hritam Mukherjee and Bharath Rajeswaran in Bengaluru; Editing by Sohini Goswami, Sonia Cheema and Janane Venkatraman)