Indian shares rose on Friday, marking their second weekly gain, led by lenders such as State Bank of India after the government defended its reforms approach and on continued hopes the central bank would lower interest rates in June. The benchmark BSE index rose 0.43 percent, while the broader NSE index gained 0.46 percent on Friday. Both the indexes also marked their second straight weekly gain, with the NSE rising 0.86 percent and the BSE up 0.8 percent.
Indian stocks have become one of the worst performing markets among Asian equities in 2015 so far due to the slow pace of reforms and concerns around retrospective taxation of foreign investors. The Indian government on Thursday defended its approach to reforms, days after it succumbed to political pressure in parliament and delayed the passage of key land and tax reforms, a move that has tarnished Prime Minister Narendra Modi's first year in office.
Banks were also helped by moderation in bad loan ratios of some of the state-run lenders for January-March, even as central bank governor Raghuram Rajan on Thursday said India's bad loans situation may not have peaked yet. "Government is moving towards right direction on reforms; the pace can be different though in coming times," said Pankaj Murarka, head of equities at Axis Mutual Fund. Gains were also helped by Asian shares that were trading higher ahead of US data later in the session, which is expected to give clues on the timing of an interest rate hike by the US Federal Reserve. Financial stocks led the gains. State Bank of India rose 2.3 percent while Housing Development Finance Corporation gained 2 percent. Axis Bank was up 1.5 percent and Kotak Mahindra Bank advanced 1.6 percent.