Indian equity markets were little changed on Friday, but ended higher for a second straight week, as gains in blue-chips such as Infosys Ltd were offset by losses in state-run lenders. The benchmark BSE index, which hit a fresh high in early trade, ended 0.02 percent lower at 36,541.63. The broader NSE index ended 0.04 percent lower at 11,018.90. For the week, the BSE index was up 2.5 percent, while the NSE index has gained 2.3 percent.
Public sector lenders took a hit, with the Nifty PSU bank index ending 2.1 percent lower, while Infosys gained 1.8 percent ahead of its results. India's annual retail inflation rose 5 percent in June, but was below market expectations, according to a Thomson Reuters poll. June was the eighth straight month in which inflation was higher than the Reserve Bank of India's medium-term target of 4 percent.
"The market is grappling with rising core inflation. While the recent drop in crude will help, the likelihood of a rate hike has clearly risen, and that is compressing spreads and margins for financials, particularly those with challenged balance sheets," said Sunil Sharma, Chief Investment Officer at Sanctum Wealth Management. Public sector lenders took a hit, with the Nifty PSU bank index dropping as much as 2.5 percent. Bank of Baroda Ltd fell 3.8 percent while State Bank of India slipped 1.6 percent.
Shares of software services exporter HCL Technologies Ltd fell as much as 3 percent after it approved a buyback proposal on Thursday. Meanwhile, an uptick in oil prices pushed energy stocks higher, such as Reliance Industries Ltd which gained 1.6 percent. Infosys Ltd, which is due to report results later in the day, gained 1.8 percent.
Meanwhile, Asian markets took a breather from concerns around escalating US-China trade war, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.56 percent.