The BSE Sensex jumped over 200 points in early trade on Friday tracking gains in banking, auto and energy stocks amid positive cues from global markets as risk appetite was whetted by a comment from a senior US official that the United States and China are getting close to an interim trade pact.
The 30-share index was trading 206.79 points, or 0.51 percent, higher at 40,493.27, while the broader NSE Nifty rose 55.05 points, or 0.46 percent, to 11,927.15.
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"There is some optimism coming in on a deal being brokered between the US and China," said Saurabh Jain, assistant vice-president research, SMC Global Securities to Reuters. Jain, however, cautioned the gains could be short-lived as domestic lenders may soon come under pressure due to their exposure to telecom services provider Vodafone Idea, which posted huge losses on Thursday.
Top gainers in the Sensex pack included SBI, Tata Motors, Bharti Airtel, Vedanta, ICICI Bank, Kotak Bank, Tata Steel, M&M, HCL Tech and Sun Pharma, rising up to 3 percent, according to a PTI report. The Nifty public sector undertaking and metal stocks led gains, rising 3 percent and 0.5 percent, respectively. Vedanta Ltd posted a surge in September quarter net profit, sending shares up 1 percent.
On the other hand, HDFC, NTPC, Axis Bank and Bajaj Auto fell up to 0.43 percent.
On Thursday, the Sensex ended 170.42 points, or 0.42 percent, higher at 40,286.48. Similarly, the broader NSE Nifty rose 31.65 points, or 0.27 percent, to end at 11,872.10.
Foreign institutional investors offloaded shares worth Rs 562.05 crore in the capital market in the previous session, while domestic institutional investors purchased equities worth Rs 82.74 crore, data available with stock exchange showed,
Rupee appreciates 18 paise
On the currency front, the rupee appreciated by 18 paise to 71.78 against the US dollar in early trade on Friday as gains in domestic equity market and weakening of the American currency vis-a-vis other currencies overseas strengthened investor sentiments.
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At the interbank foreign exchange the rupee opened at 71.80 then gained further ground and touched a high of 71.78, registering a rise of 18 paise over its previous close.
On Thursday, rupee had settled for the day at 71.96 against the US dollar.
The domestic unit, however, could not hold on to the gains and was trading at 71.86 against the dollar at 1008 hrs.
Higher opening in domestic equities supported the local unit, forex traders said
Asian shares rise as Kudlow comments lift trade hopes
Asian stocks jumped on Friday, propelled by a record S&P 500 finish and White House comments suggesting Washington and Beijing were close to striking a trade deal, reviving hopes the tariff war may near an end.
However, analysts said investor sentiment remained fragile after weak data from China reinforced concerns about the global economy and amid increasing caution about false signs of progress in Sino-US trade talks.
White House economic adviser Larry Kudlow said on Thursday that Washington was getting close to a trade agreement with China, providing a fillip to investor confidence.
That helped to lift MSCI's broadest index of Asia-Pacific shares outside Japan up 0.67 percent. Japan's Nikkei added 0.76 percent and Australian shares gained 0.8 percent.
Chinese blue-chip shares gained 0.06 percent shortly after the start of trade.
Shane Oliver, chief economist at AMP Capital in Sydney, likened the market's reaction to positive trade news to being in a relationship with an alcoholic, driven by entrenched hopes for recovery.
"Markets want to believe that there will be some sort of resolution to this issue, some sort of lasting truce at least, even though the experience of the last 18 months doesn't give a lot of cause for comfort," he said.
However, Oliver said weaker Chinese and US economies, and the US presidential election next year put pressure on both sides to come to an agreement.
The safe-haven yen weakened, with the dollar rising 0.18 percent to buy 108.58 yen. The euro EUR= was barely changed at $1.1023 and the dollar index, which tracks the greenback against a basket of six major rivals was off just 0.01 percent at 98.154.
Higher US Treasury yields also illustrated the risk-on tone in the Asian session, with the 10-year yield US10YT=RR rising to 1.8445 percent from a US close of 1.815 percent on Thursday.
The policy-sensitive two-year yield rose to 1.6117 percent from 1.593 percent on Thursday after US Federal Reserve Chair Jerome Powell said the risk of the US economy facing a dramatic bust is remote.
A Reuters poll of more than 100 economists showed that while concerns have eased over a US recession, few see an economic rebound, and most believe a trade truce is unlikely in the coming year.
Global sentiment has been buffeted in recent weeks by conflicting assessments of progress in talks between the United States and China aimed at ending their 16-month-long trade war.
On Thursday, China's commerce ministry said that the two countries are holding "in-depth" discussions on a first phase trade agreement, and that cancelling tariffs is an important condition to reaching a deal.
China has also ended a nearly five-year ban on imports of US poultry meat, which the US Trade Representative said would lead to more than $1 billion in annual shipments to China.
Those developments followed comments from officials from both countries last week that they had a deal to roll back tariffs, only to have US President Donald Trump deny that any such deal had been agreed to.
The new record for the S&P, which gained just 0.08 percent to 3,096.63, came despite a grim outlook from network gear maker Cisco Systems that underlined the impact of trade uncertainty.
The company forecast second-quarter revenue and profit below expectations as increasingly global economic uncertainties kept clients away from spending more on its routers and switches, sending its shares down 7.3 percent.
The Dow Jones Industrial Average fell 0.01 percent 27,781.96 and the Nasdaq Composite dropped 0.04 percent to 8,479.02.
European shares also fell after data showed the German economy grew just 0.1 percent in the third quarter, with consumer spending helping the country to avoid a mild contraction.
"In further diminishing the likelihood of significant fiscal stimulus from the Berlin government, it was not good news at all," analysts at National Australia Bank said in a morning note.
The German data followed numbers from China indicating a faster-than-expected slowdown in factory output growth in October due to weak domestic and global demand.
In commodity markets, US crude prices rebounded after sliding Thursday on rising US crude inventories. US West Texas Intermediate crude was 0.49 percent higher at $57.05 a barrel.
Global benchmark Brent crude was up 0.45 percent at $62.56 per barrel.
Gold retreated from gains that had been prompted by trade uncertainty. Spot gold was last trading at $1,467.50 per ounce, down 0.23 percent.
Brent futures, the global oil benchmark, rose 0.45 percent to $62.56 per barrel.
-- With inputs from agencies