MUMBAI, Feb 1 (Reuters): Indian shares edged higher on Friday, snapping a five-day losing streak as blue chips such as ICICI Bank rebounded, but indexes still suffered their worst monthly performance since the rupee slumped to a record low in August.
Domestic shares have tumbled, marking a sharp turnaround since indexes posted record closing highs on Jan. 23, on the back of a rout in emerging markets and the Reserve Bank of India's unexpected hike in interest rates on Tuesday.
The falls since last week have sent the NSE index down 3.4 per cent for January, its worst monthly performance since August, when domestic markets had cratered. The index hit its lowest intraday level since November on Thursday.
Like then, Indian markets now are being caught in an emerging market storm caused by fears of foreign investor outflows after the Federal Reserve started cutting down its monetary stimulus since last month.
Foreign institutional investors have sold heavily since last week, cutting their net inflows into domestic shares so far this month to just $85.4 million.
"Going ahead, the concerns on growth and inflation /interest rates remain. Even after the recent market fall, valuations at 14x - 14.5x consensus FY15 earnings are not undemanding, we feel," said Dipen Shah, head of private client group research at Kotak Securities.
The broader NSE index rose 0.26 per cent, or 15.80 points, to end at 6,089.50, but fell 2.83 per cent for the week. The benchmark BSE index rose 0.08 per cent, or 15.60 points, to end at 20,513.85, but fell 2.9 per cent for the week. For the month, the index fell 3.1 per cent.
Blue chips, especially lenders, rebounded after recent sharp losses. ICICI Bank Ltd rose 1.4 per cent, while among state-owned banks, Punjab National Bank rose 5.8 per cent while Bank of Baroda ended 3.2 per cent higher.
The NSE bank sub-index fell 10.1 per cent in January, its worst month since July.
Banking stocks are among those most heavily owned by foreign investors, but caution has risen after the central bank unexpectedly hiked interest rates this week although it also signalled it may be more accommodative should inflation ease.
