MUMBAI The BSE Sensex 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 January 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 Nifty down 3.4 percent 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.
Nifty rose 0.26 percent, or 15.80 points, to end at 6,089.50, but fell 2.83 percent for the week.
The benchmark BSE Sebnsex rose 0.08 percent, or 15.60 points, to end at 20,513.85, but fell 2.9 percent for the week. For the month, the index fell 3.1 percent.
Blue chips, especially lenders, rebounded after recent sharp losses.
ICICI Bank Ltd (ICBK.NS) rose 1.4 percent, while among state-owned banks, Punjab National Bank (PNBK.NS) rose 5.8 percent while Bank of Baroda (BOB.NS) ended 3.2 percent higher.
The NSE bank sub-index fell 10.1 percent 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.
Among other blue chips, Reliance Industries Ltd (RELI.NS) ended 0.8 percent higher.
Software exporters gained on hopes the U.S. demand outlook will be sturdier than other countries, dealers said.
Tata Consultancy Services Ltd (TCS.NS) rose 1.1 percent, while Wipro Ltd (WIPR.NS) gained 0.7 percent.
Oberoi Realty Ltd (OEBO.NS) rose 2.3 percent after it said on Thursday India's apex court dismissed a lower court judgement declaring as private forest certain properties that a unit of the real estate developer wanted to develop.
Lupin Ltd (LUPN.NS) rose 1.4 percent ahead of its quarterly earnings on Monday. However, the company's operating profit may lag consensus estimates, Thomson Reuters StarMine's SmartEstimates shows.
Shares in Hero MotoCorp (HROM.NS), India's largest two-wheeled vehicle maker, fell 1.5 percent after it posted on Thursday a slower-than-expected 7.5 percent rise in third-quarter profit, hurt by a rise in input costs and currency fluctuations.
(Editing by Anupama Dwivedi)