BSE Sensex bounces 4 pct; banks, techs rise

MUMBAI (Reuters) – The BSE Sensex bounced 4 percent on Friday after sliding more than a fifth over the past seven sessions, taking cues from a turnaround in Asian markets and expectations for an interest rate cut.

Traders said most of the buying was short covering ahead of the weekend after the market had slumped to its lowest close in more than three years on Thursday.

Software and financial stocks that had been battered over the past two weeks, led the rise with a falling rupee expected to help export-focused outsourcers.

"Asian markets have turned higher on expectation of a rate cut in China and because U.S. futures turned positive. We are following the trend," said Deepak Jasani, head of retail research at HDFC Securities.

Traders are also expecting the Reserve Bank to ease monetary policy to help a slowing economy and bolster sluggish consumer spending.

By 12:44 p.m., the 30-share BSE index was up 3.37 percent at 8,735.70, after rising as high as 8,820.96.

"A lot of this is closing the short positions ahead of the weekend. But buying has also come in, maybe for trading opportunities," said Ketan Dedhia, Managing Director at Nalanda Securities.

All but one of the index components were higher, while in the broader market losers edged gainers by a ratio of 1.1:1 on moderate volume of 127.8 million shares.

The 50-share NSE index was up 3.2 percent at 2,634.60.