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Asia300

India shares rise for 2nd week as federal budget boosts optimism

MUMBAI (NewsRise) -- Indian shares rose for a second straight week on investor optimism that higher government spending next fiscal year, announced in the federal budget, would drive consumption demand in Asia's third-largest economy.

The benchmark BSE Sensex rose 0.05% on Friday to 28,240.52 points, a four-month high, while the broader NSE Nifty 50 closed 0.1% higher at 8,740.95 points. For the week, the indices gained 1.3% and 1.2%, adding onto the 3.1% and 3.5% surge in the previous week.

Cigarette-maker ITC and telecom stocks were among the top weekly gainers, while software stocks and Tata Motors were the losers.

"Sentiment remains upbeat," said Jayant Manglik, President for retail distribution at Religare Securities. "Any declines should be used to add stocks, especially of auto and banking sector."

India's federal budget presented Wednesday was cheered by investors. The government announced a record spending of 21.47 trillion rupees for the next fiscal year starting Apr. 1, with thrust on rural and infrastructure, while marginally deviating from the path of medium-term fiscal consolidation.

It widened its fiscal deficit target to 3.2% of gross domestic product for the year, from the previous aim of 3%. However, India remains committed to achieving the 3% fiscal deficit target for the year ending March 2019.

All eyes now turn to the Monetary Policy Committee's rate decision meeting next week. The MPC's two-day meeting starts Feb. 7.

Sixteen of the 30 constituents on the Sensex ended higher on Friday, while overall advancing stocks beat declining ones 1,637 to 1,183, with 154 issues unchanged.

ITC, which has among the highest weight in the indices, gained 5.8% for the week, boosted by a smaller-than-expected increase in cigarette taxes in the union budget. On Friday, it ended 0.5% lower at 272.45 rupees.

Telecom shares were the biggest gainers for the week on news of a likely consolidation in the sector. Britain's Vodafone Group's Monday confirmed it was in talks to merge its Indian operations with rival Idea Cellular in an all-share deal.

Idea Cellular - part of the Nifty index - surged a record 40% during the week, while larger rival Bharti Airtel gained 9.3%, its largest weekly gain since March 2015. Friday, Idea ended down 0.6% at 109.20 rupees while Bharti closed little changed at 353.65 rupees. The merger, if happens, would create a market leader that is better equipped to handle the intensifying price war in the sector.

Information technology companies fell for the week on concerns tighter visa rules in the U.S. may add to their expenses.

Tata Consultancy Services, India's biggest company by market value, slumped 5.3% for the week. Infosys declined 0.8% and Wipro finished 2% lower. For the day, Tata Consultancy rose 1.3% to 2,233.75 rupees, while Infosys ended little changed at 934.95 rupees and Wipro rose 0.3% to close at 456.70 rupees.

Tata Motors declined 1.6% to 522.50 rupees, extending its weekly fall to 4% after disappointing January sales.

In rest of Asia, Hong Kong's Hang Seng index closed 0.2% lower on Friday. South Korea's Kospi ended up 0.1% and China's Shanghai Composite fell 0.6%. Japan's Nikkei 225 index closed little changed.

--Dhanya Ann Thoppil

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