Indian shares follow Asian peers higher, Reliance jumps on new deal

By Sachin Ravikumar

BENGALURU (Reuters) - Indian shares jumped on Friday, tracking a surge in Asian equities, as Reliance Industries gained on yet another stake sale, while investors also awaited economic stimulus for small businesses battered by the coronavirus outbreak.

BofA economists on Friday predicted the government may unveil fiscal stimulus amounting to 0.3% of the country's gross domestic product, focusing on small- and medium-sized businesses, real estate firms and banks.

India's blue-chip NSE Nifty 50 has switched between gains and losses in the last four sessions, and analysts predict the index will trade in a tight range until new developments surrounding the COVID-19 pandemic.

On Friday, the Nifty 50 <.NSEI> rose 1.56% to 9,342.60 by 0600 GMT, while the S&P BSE Sensex <.BSESN> climbed 1.65% to 31,964.43.

Many analysts said recent gains mainly reflected upbeat global sentiment and failed to factor in challenges facing Indian businesses, many of which have lost weeks of revenue during the world's biggest lockdown.

"If you go by the economic reality on the ground, there is no justification for the Nifty to be north of 9,000," said V.K. Vijaykumar, chief investment strategist at Geojit Financial Services.

"Most realistic people would have gone short. There will be a lot of short-covering," he said. Short sellers bet that a security's price will fall by borrowing a stock with a view of buying it back later at a lower price to cover the bet and make a profit.

Meanwhile, Asian shares rose on Friday as investors focused on U.S.-China trade talks and solid corporate earnings rather than data later on Friday expected to show the worst U.S. unemployment rate in decades.

Shares in oil-to-telecoms conglomerate Reliance Industries Ltd <RELI.NS> soared 4.1%, giving the biggest boost to the Nifty 50, after it unveiled another sizeable investment into its digital arm.

Banking stocks <.NSEBANK> gained 1.9%. They have been volatile in the past few sessions as the sector is expected to suffer a fresh bout of bad debt as the coronavrius crisis causes defaults.

About 4.4 trillion rupees ($58 billion) of corporate loans could default in the next 12 months due to the COVID-19 crisis, the Indian arm of Fitch Ratings has estimated, according to Macquarie Research.

India's pharmaceutical stocks, which have recorded strong gains in recent weeks on hopes for more medicine sales amid the pandemic, climbed again on Friday.

The Nifty pharma index <.NIPHARM>, the only one of the 12 sectoral indexes to gain so far this year, was up 2.1%.

(Reporting by Sachin Ravikumar; Editing by Aditya Soni)