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Markets

India shares rise for third week as ICICI Bank, State Bank pace gains

Hindalco, Eicher Motors among major gainers

MUMBAI (NewsRise) -- Indian shares clocked their third straight weekly advance, led by lenders amid optimism their asset quality will improve in coming months.

The BSE Sensex advanced 0.8% and the Nifty 50 Index rose 0.6% this week. On Friday, the gauges fell 0.4% each to 37,869.23 and 11,429.50, respectively. ICICI Bank has added 7.6% since last Friday after the lender clarified it made full disclosures regarding its soured assets. The comments allayed fears over its asset quality, after some media reports said the bank was using accounting policy changes to mask bad loans.

State Bank of India, which reported its third quarterly loss on Friday, advanced 1.4% this week. Axis Bank climbed 7.4% and Yes Bank added 2.8%.

Lenders such as HDFC Bank and Kotak Mahindra Bank that have a higher proportion of retail assets underperformed this week, falling 0.2% and 1.7%, respectively.

"The rally in corporate lenders this week is probably on account of the valuation gap vis-a-vis the retail lenders and a bit of covering of short positions," said T.S. Harihar, chief executive and founder at HRBV Client Solutions. "While retail lenders underperformed this week, our preference remains with retail banks, as we reckon that their earnings growth outlook more than compensates for their high valuations."

Among other major movers this week, Hindalco Industries climbed 5.1% after the aluminium producer's U.S. subsidiary Novelis reported upbeat earnings. Hindalco reported a 43% rise in standalone first-quarter net profit on Friday.

Eicher Motors added 7.6%, primarily on the back of a 5.6% jump to 29,010.65 rupees on Friday after it reported a 25% increase in its April-June net profit. Credit Suisse reportedly upgraded the motorcycle maker to 'neutral.'

Among the losers, Adani Ports and Special Economic Zone dropped 5.3% and drug maker Lupin dropped 8.8% after their June quarter earnings missed estimates.

The Sensex's weekly performance came amid a further escalation in trade tensions between U.S. and China. Earlier this week, U.S. Trade Representative's office said that it will begin imposing 25% tariffs on $16 billion of Chinese imports from Aug. 23, which drew a similar retaliation from Beijing.

Asian markets were mostly higher this week despite the latest tit-for-tat tariffs by China and U.S. The gains were helped by the rebound on China's benchmark index from last week's tumble. The Shanghai Composite rose 2% this week amid hopes of policy support, recovering from last week's more than 4.5% decline.

On Friday, Jet Airways plunged 8.4% in Mumbai trading after the airline deferred its June quarter earnings. GAIL (India) dropped 3.4%, despite a 23% rise in June-quarter net profit.

--Gurdev Singh Virk

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