Indian shares gained on Friday after logging their worst session in three months a day prior on concerns over the outcome of ongoing national elections and selling by foreign investors.

The blue-chip NSE Nifty 50 was up 0.46% at 22,060.80 points, while the S&P BSE Sensex advanced 0.39% to 72,693.06, as of 10:50 a.m. IST.

Despite the rise on the day, benchmark indices have dropped about 1.75% each this week, with the Nifty 2% away from erasing all gains for the year and the Sensex up less than a percent so far in 2024.

A lower voter turnout so far in India's general election has raised questions about whether the ruling Bharatiya Janata Party (BJP) and its allies can achieve the landslide victory predicted by opinion polls just a month ago.

Counting of votes is scheduled for June 4.

"FIIs are playing safe and lightening their positions ahead of the subsequent phases of elections and vote count," said Deepak Jasani, head of retail research at HDFC Securities.

So far in May, foreign portfolio investors (FPIs) have offloaded Indian shares worth $1.2 billion, set for the highest FPI sale since January.

They sold $1 billion in April but bought more than $4 billion in March.

Market technicals are also pointing to weakness.

The benchmark Nifty 50 slipped below its 100-day moving average for the first time in six months on Thursday, but recovered on Friday.

Volatility has risen for eleven straight sessions and is hovering close to 19-month highs.

The recent strong performance of Chinese indices is also a trigger, prompting a shift of foreign inflows from the Indian to the Chinese market, said Santosh Pandey, president and head of Nuvama Professional Clients Group.

On Friday, ten of the 13 major sectors logged gains.

Energy stocks rose 1%, led by a 3% rise in Bharat Petroleum Corp after its March-quarter results.

"While BPCL missed its profit estimate, we expect the company to post better profitability than peers in fiscal year 2025 and 2026, due to likely margin improvement across refining and marketing segments," said Jefferies, reiterating its "buy" recommendation. BPCL was the top Nifty 50 gainer on the day.

Consumer stocks rose 1.4%, led by a 2.5% rise in ITC. Expectations of rural demand revival on hopes of a normal monsoon have aided sentiment for consumer stocks, analysts at brokerages Anand Rathi and Motilal Oswal said.

 

(Reporting by Hritam Mukherjee and Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza and Sonia Cheema)