Financials power Indian shares to weekly gains

A trader works at a stock brokerage in the western Indian city of Ahmedabad

BENGALURU (Reuters) - Indian shares rose on Friday and logged weekly gains, aided by a rise in financials and optimism that the rate hike cycle may be near the end after global central banks hinted at inflation easing, while an intraday rebound in key Adani group stocks added to gains.

The Nifty 50 index closed 1.38% higher on Friday at 17,854.05, while the S&P BSE Sensex climbed 1.52% to 60,841.88. The Nifty 50 and Sensex rose 1.42% and 2.55%, in the week, respectively.

High weightage financials rose over 2.3% ahead of earnings of the country's largest lender State Bank of India and after clarification from life insurers SBI Life and HDFC Life, addressing investor concerns regarding the latest budget proposals.

"Financials are likely to outperform the benchmarks, due to strong fundamentals and SBI is expected to deliver strong Q3 numbers," said Narendra Solanki, head of equity research at Anand Rathi Shares & Stock Brokers.

The clarification from life insurance companies has averted a knee-jerk reaction in the markets due to the budgetary announcement, Solanki added.

Insurance stocks declined over the previous two sessions after the budget proposed taxing returns upon maturity of life insurance policy with aggregate premium above 500,000 rupees a year.

SBI Life and HDFC Life, on Thursday, said the impact due to the budgetary proposal would be insignificant.

Thirty-six of the Nifty 50 stocks rose with Adani Ports, Titan among the top gainers.

Key Adani stocks, including the Nifty 50 constituents Adani Enterprises and Adani Ports advanced after the recent selloff in the conglomerate's stocks which has caused a rout of over $100 billion in market capitalisation following the Hindenburg report on Jan. 24.

The Adani saga has hurt the sentiment in the market, three analysts said, adding that markets could be volatile over the next few sessions until clarity emerges on the conglomerate.

The rise in domestic equities is also spurred by dovish comments from global centrals banks over the last two sessions.

The Reserve Bank of India is expected to raise the key policy repo rate by 25 bps at its policy meeting on Feb. 8, beginning the end of almost a year-long tightening cycle.

($1 = 82.0940 Indian rupees)

(This story has been corrected to fix indexes closing levels in the second paragraph)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Dhanya Ann Thoppil)