Sensex logs 7th consecutive weekly rise

The BSE benchmark Sensex rose 0.8 percent on Friday to record their seventh straight weekly rise, their best run in nearly two years, bolstered by strong foreign fund inflows amid growing concerns the market has run up too fast in a short span of time.

The benchmark BSE index is up 18 percent this year, mainly on buying by overseas portfolio investors who have pumped in USD 4.4 billion so far this year, after pulling out more than USD 500 million in 2011.

Top lenders such as State Bank of India and ICICI Bank were among the top gainers in the day's trading, fuelled by an improved credit demand outlook amid expectations of interest rate cuts by the central bank.

Power equipment maker Bharat Heavy Electricals Ltd closed 6.7 percent higher at Rs 303.55, after rising as much as 14.3 percent to its highest level in three months, as investors bet on a rise in orders this year.

State-run NTPC Ltd plans to award USD 3.25 billion of equipment orders by March-end after a ruling by India's top court settled a case with a bidder in favour of the country's top power producer, its chairman said on Thursday.

The 30-share BSE index closed up 0.75 percent, or 135.36 points, at 18,289.35, its best close in more than six months. Nineteen of its components ended in the positive territory.

"The global liquidity conditions have improved in the last couple of months and India is benefitting from fewer investment opportunities in the developed markets," said Claugio Bernasconi, a Switzerland-based fund manager for AMC Expert India Fund.

"Although a bounceback was expected after the Indian markets became the worst performer last year, I am turning cautious now because this sudden and strong rally is not supported by any improvement in the fundamentals of the country."

Technical indicators show the benchmark index could be ripe for a correction as it is deep in "overbought" territory, with its 14-day relative strength index at 77 on Friday. A score of 70 and above is considered overbought.

Citigroup said in a research report the Indian market rally was mainly driven by overseas inflows with "relatively little evidence" of retail participation, though the domestic economy or the corporate sector outlook have not changed much.

Indian economic growth has lost momentum as lingering eurozone debt woes, coupled with high domestic interest rates and a policy paralysis at home have hit capital investments by companies.