MUMBAI: Indian shares edged higher on Friday to post their biggest weekly gains in more than four months as public sector banks such as State Bank of India advanced, while a modest recovery in European stocks supported investor sentiment.

The NSE index rose 0.26 percent to 7,210.75, recovering from an earlier fall of as much as 0.6 percent to end not far from the session’s high of 7,226.85. The benchmark BSE index rose 0.25 percent to close at 23,709.15.

Both indexes gained 3 percent for the week, their biggest weekly gain since early October.

Fall in oil prices took a toll on energy stocks such as Bharat Petroleum, but indexes were still headed for their biggest weekly gain in four months, helped in part by gains in global markets.

Asian shares slipped from near-three-week highs on Friday, tracking weak oil prices as a record build in US crude stocks stoked concerns about global oversupply, outweighing moves by oil producers including Saudi Arabia and Russia to cap oil output. Traders expect markets to remain volatile next week ahead of the 2016/17 budget to be unveiled on Feb. 29, while monthly contracts for futures and options will expire on Thursday. The prospect of falls in global markets could also cap gains.

Foreign investors sold a net $42.81 million worth of Indian shares on Feb. 17, taking this year’s outflow to $2.47 billion.

“There is a risk aversion globally as the developed world is moving towards negative interest rates and that reflects a possibility of deflation around the globe,” said Deepak Jasani, head of retail research at HDFC Securities.

Currency and bond markets were closed on Friday for a local holiday.

Mirroring concerns over oil prices, energy shares fell with Bharat Petroleum, Hindustan Petroleum, Indian Oil shedding between 1 percent and 4 percent.

Among gainers, public-sector banks such as State Bank of India and Punjab National Bank rose more than 2 percent and 3 percent respectively after the Business Standard newspaper, citing unidentified government officials, said the government is likely to set up a “bad bank” to take over non-performing assets.

Jet Airways gained 2 percent after the Financial Express reported Etihad Airways is likely to raise its stake in Jet Airways to 49 percent from 24 percent.—Reuters