Indian markets witnessed extremely volatile trading this week in the wake ratings downgrade of the country's largest lender State Bank of India ahead of the second quarter earnings season and reports of easing European crisis.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the week at 16,232.54 points, down 1.34% or 221.22 points from its previous week's close at 16,453.76 points.
The markets commenced the week on a subdued note and slumped by the mid-week after Moody's downgraded State Bank of India's ratings. The benchmark Sensex tumbled almost 600 points in the first two trading days of the week due to heavy selling pressure in banking stocks.
Global ratings agency Moody's Investor Service on Tuesday downgraded State Bank of India's "financial strength rating" to D+ from C- citing the low capital adequacy and the bank's recent failure to raise capital and deteriorating asset quality. The agency has also cut the bank's hybrid debt rating to Ba3 from Ba2.
Ratings downgrade battered the banking stocks with State Bank of India slumping almost 8%.
However, the markets rebounded the last trading day of the week on attractive valuations and on optimism of the European crisis easing.
The 30-scrip Sensex rebounded 2.79% or 440.13 points on Friday, partly recovering the losses.
The 50-scrip S&P CNX Nifty of the National Stock Exchange also ended the week in loss of over one percent amid volatile trade. After the first three days of battering, the Nifty rebounded 2.83% to close at 4,885.70 points on Friday.
Metal and banking stocks led the recovery in the markets towards the end of the week. Sterlite Industries and Jindal Steel surged more than 8%. Other prominent Sensex gainers were: Tata Motors, up 7.73% at Rs158.80; ICICI Bank, up 5.82% at Rs824.30; DLF, up 5.81% at Rs218.45 and Hindalco Inds, up 4.83% at Rs125.95.
Only two of the 30 Sensex scrips closed in the red on Friday. Bharti Airtel fell 3.34% at Rs.354.80, and Hero MotoCorp closed 0.26% down at Rs1,941.05.
Other Asian markets pared losses towards the end of the week. Japan's Nikkei rose 0.98% at 8,605.62 points and Hong Kong's Hang Seng index advanced 3.11% at 17,707 points on Friday.
On weekly basis, the Japanese Nikkei registered loss of 1.1% while Hong Kong's Hang Seng gained 0.7%.
Chinese markets were closed for a week-long holiday.
European markets also advanced toward the end of the week. Britain's FTSE 100 closed 0.23% up at 5,303.40 points. German DAX advanced 0.54% at 5,675.70 points and French CAC 40 index closed 0.66% higher at 3,095.56 points on Friday.
American markets retreated on Friday. The Dow Jones Industrial Average closed 0.18% down at 11,103.10 points and the S&P 500 fell 0.82% at 1,155.46 points on Friday, trimming its weekly gain at 2.1%.