MUMBAI: Indian benchmark indexes logged their best week since June on Friday, led mainly by financials as the central bank cut the cash reserve ratio (CRR) that banks are required to hold, effectively easing monetary conditions.

The NSE Nifty 50 settled 0.12% lower at 24,677.8, while the BSE Sensex shed 0.07% to 81,709.12.

The Nifty and Sensex added 2.3% and 2.4%, respectively, this week, their best since early June when the country’s national election results confirmed policy continuity.

On Friday, the Reserve Bank of India (RBI) lowered the CRR by 50 basis points to 4% for the first time in four years, while keeping interest rates unchanged.

“Equity markets got what they wanted from the RBI and have taken the policy outcome in their stride,” said Dhiraj Relli, chief executive of HDFC Securities.

Analysts said that the central bank’s concerns over a recent growth slump as well as elevated inflation could keep markets in consolidation mode, with a positive bias in the coming days.

Financials gained 3% in the prior four sessions in anticipation of the cut in the CRR, which is expected to support the margins of lenders. The index closed little changed on the day.

“The CRR reduction will release about 1.16 trillion rupees ($13.71 billion) into the banking system and is a big positive for the banking sector specifically,” Abhishek Goenka, founder and CEO of IFA Global said.

Other domestic rate-sensitive sectors such as realty rose 5.3% this week, while auto gained 2.5%.

The weekly jump in the benchmarks was also supported by IT stocks, which rose this week on the back of comments from the Federal Reserve Chair, signaling strength in the US economy.