A benchmark index for the Bombay Stock Exchange (BSE) rallied nearly 3% in this week's trade, closing in the positive for the fourth straight week on the back of strong buying support from foreign institutional investors.
The 30-scrip sensitive index (Sensex) of BSE ended the week at 17,233.98 points, up 2.96% or 494.97 points from its previous week's close at 16,739.01 points.
The Sensex gained 0.92% or 156.80 points to close at 17,233.98 points on Friday, the highest level in almost 10 weeks.
The 30-scrip index has jumped almost 9% since the beginning of this month on the back of strong buying support from foreign institutional investors.
These investors have pumped in over $2 billion since the beginning of the year. FIIs net inflow was $252 million on Friday.
In fact, overseas investors were the net sellers in Indian equities market last year. The FIIs had off-loaded equities worth Rs 3,642 crore ($728 million) in 2011.
Foreign fund flows have also led to a strong recovery in the value of rupee. The rupee rose to a 11-week high of 49.31 against a US dollar this week.
The 50-scrip S&P CNX Nifty of the National Stock Exchange has also rallied almost 9% this month. The Nifty closed 0.90% or 46.40 points higher at 5,204.70 points on Friday, the last trading day of the week.
An unexpected cut in the cash reserve ratio (CRR) by the Reserve Bank of India boosted investors' sentiments in the market this week.
The RBI in its third quarter policy review cut the cash reserve ratio (CRR), the amount against deposits which commercial banks have to keep as liquid assets such as cash, by 50 basis points to 5.5% from 6%.
"This step will release Rs 320 billion into the system," RBI governor D Subbarao said on Jan 24 after presenting the third quarter review of the monetary policy for the current fiscal year.
Buying activities intensified in Reliance Industries Ltd this week as buy-back date of the company's share nears.
The Mukesh Ambani-led Reliance Industries have offered to buy back up to 12 crore equity shares worth Rs 10,440 crore from the open market at a maximum price of Rs 870 per share. The buy-back will start from Feb 1 and close Jan 19, 2013.
Reliance Industries share rallied 3.48% to close at Rs 817.60 Friday.
Other prominent Sensex gainers on Friday were: Sterlite Inds, up 5.49% at Rs 120.15; Tata Motors, up 4.10% at Rs 239.90; L&T, up 3.76% at Rs 1,381.60; Bharti Airtel, up 3.66% at Rs 372.55; and Tata Steel, up 3.09% at Rs.458.75.
Major losers on the 30-scrip index were: DLF, down 3.47% at Rs 211.55; Bajaj Auto, down 3.07% at Rs 1,538.20; Bhel, down 2.84% at Rs 273.65; and Hero MotoCorp, down 2.21% at Rs 1821.85.