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India stocks post weekly gains as banks advance

ICICI Bank, Axis Bank pace gains

MUMBAI (NewsRise) -- Indian shares advanced this week, led by ICICI Bank and other lenders, as investors bet that the worst of asset quality problems may be over.

The BSE Sensex and the broader Nifty 50 Index rose 1.8% each this week, marking their sixth weekly advance in seven. ICICI Bank was the biggest contributor to the gains on both the indexes, climbing 10% to close at 311.10 rupees, its highest in two months. While the bank reported that its March quarter net profit halved from a year earlier amid an increase in provisioning, analysts highlighted the reducing pace of incremental slippages on a quarter-on-quarter basis. They also noted the relative modest valuations of the lender compared with other private banks.

ICICI's earnings lifted Axis Bank and State Bank of India, which too have a relatively large corporate exposure. Axis Bank has added 6.3% since last Friday and SBI 3.7%.

On Friday, the Sensex advanced 0.8% to 35,535.79 and the Nifty 50 gauge rose 0.8% to 10,806.50 as lower-than-expected U.S. inflation data eased fears of quicker pace of interest rate increases by the Federal Reserve, boosting demand for risk assets. The S&P 500 Index overnight rose to its highest level since mid-March. Among regional indexes, Hong Kong and Japan equity benchmark indexes rose by 1% or more.

Oil and Natural Gas Corp. has added 3.9% since last Friday as Brent crude prices climbed to new three-and-a-half year highs following the U.S. decision to withdraw from the Iran nuclear deal. Asian Paints rose 8% in the week, with most of the advance coming on Friday after it reported a 3.4% increase in net profit for the March quarter. Credit Suisse upgraded the stock and raised the target price, citing improved visibility on volumes and profit margins.

On Friday, ICICI rose 1.3%, SBI added 1.2%, and Axis advanced 1%. ONGC fell 0.3% and Asian Paints jumped 6.2%.

Pharmaceutical companies were the biggest losers this week amid uncertainty over U.S. President Donald Trump's polices, as he works on his pledge to bring down drug prices in the world's largest economy. Later Friday, Trump is expected to give a speech on controlling drug prices.

Sun Pharmaceutical Industries dropped 9% this week and Dr. Reddy's Laboratories lost 5.5%. On Friday, Sun fell 5.1% while Dr. Reddy's edged 0.1% higher.

Meanwhile, voting in Karnataka state elections will take place on Saturday and the results are due on Tuesday. In view of the upcoming national elections, likely in the middle of next year, the Karnataka state polls are being closely watched to ascertain the likelihood of Prime Minister Narendra Modi retaining power.

"While the election outcome may impact sentiment (positively or negatively, depending on the outcome), this will only be a temporary phenomenon, in our view, as has been the case during previous state elections," Deutsche Bank said in a note.

Among movers on Friday, Zee Entertainment Enterprises advanced 0.7% after its March quarter earnings. Nestle India climbed 5.7% after a 38% rise in net profit for the same period.

Fortis Healthcare dropped 2.7%. The company's board of directors decided to accept an investment offer of 18 billion rupees (267million) from a consortium comprising Sunil Kant Munjal of Hero Enterprise and the Burman family of the Dabur group.

Union Bank of India rose 0.7% despite reporting a bigger-than-expected loss in the March quarter. Software exporter Mphasis fell 1.3%, reversing a 12.4% intraday gain after its January-March net profit exceeded estimates of analysts polled by Bloomberg.

Idea Cellular tumbled 11.8% and Bharti Airtel fell 6.4% after Reliance Industries' telecom unit released a new offer for its users. Shares of Reliance Industries rose 0.8%.

--Nimesh Vora

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