September 7, 2018 / 7:02 AM / 2 months ago

Indian shares edge up, head for worst weekly drop since mid-May

* NSE index up 0.19 pct, BSE index 0.13 pct higher

* Energy, automobile stocks lead gains

* Sun Pharma biggest drag with 5.5 pct drop

Sept 7 (Reuters) - Indian shares edged higher on Friday, supported by gains in energy and auto stocks, but were headed for their biggest weekly drop since mid-May as a depreciating rupee soured investor sentiment.

Both the BSE and NSE indexes were down about 1 percent this week after six straight weeks of gains, hurt by a weak rupee and persistent global trade war jitters.

“After a stellar August, there has been a change in sentiment - investors have become defensive, and the first week of September is reflective of that turn in sentiment,” said Anand James, chief market strategist at Geojit Financial Services.

“The rise in oil prices and a weakening rupee have become more prominent in September.”

The rupee had declined 1.4 percent this week as of last close and 12.7 percent this year, having hit its lowest at 72.11 per dollar on Thursday.

It was trading about 0.2 percent higher as of 0610 GMT on Friday after the central bank likely sold dollars via state-run banks at around 72 rupee to the dollar level to prevent the currency from declining sharply, two dealers said.

The broader NSE index was up 0.19 percent at 11,558.50, while the benchmark BSE index was 0.13 percent higher at 38,291.87.

Bajaj Auto Ltd led the gains with a jump of 3.8 percent after the federal government said it would exempt all alternate fuel vehicles from getting permits. The company announced plans to raise its 3-wheeler and quadricycle production capacity shortly after the government’s decision.

ICICI Bank Ltd advanced 1.6 percent, while Reliance Industries Ltd gained 1.3 percent.

Shares of Infosys Ltd rose 1.1 percent after the software services exporter said it formed a joint venture with Singapore state investor Temasek to expand its presence in Southeast Asia.

Meanwhile, Sun Pharmaceutical Industries Ltd was the biggest drag on the NSE index with a slump of 5.5 percent after a report that the U.S. Food and Drug Administration issued observations related to test procedures at the company’s Halol plant following inspections during Aug. 27-31.

Yes Bank Ltd dropped 4.1 percent to its lowest since April 2018, while State Bank of India fell 2.1 percent. (Reporting by Chris Thomas in Bengaluru; Editing by Subhranshu Sahu)

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