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Indian shares advanced on Friday and logged weekly gains, led by a surge in the auto sector on Mahindra & Mahindra's post-results rally and sustained buying in public sector banks.

Both the NSE Nifty 50 index and the S&P BSE Sensex gained about 1.2% each for the week, while remaining resilient in the face of fading expectations of early rate cuts in the United States.

"This week has been about resilience in Indian markets, with steady buying by domestic investors offsetting foreign outflows after U.S. inflation data triggered worries of delay in U.S. rate cuts," said Saurabh Jain, assistant vice president of research of retail equities at SMC Global.

Auto stocks led the gains, rising 4.3% for the week. Mahindra & Mahindra logged 11.5% weekly gain, on hopes of sustained earnings stability and a supply deal for electric vehicle parts with Volkswagen.

The country's public sector banks also jumped 2.7%, led by State Bank of India, on a strong earnings outlook and valuation comfort. The country's top state-owned lender was among the top weekly gainers on the benchmark index, rising 4%.

The broader, more domestically-focused small-caps fell 0.5% and mid-caps added 0.5%, underperforming the benchmarks, amid valuation concerns.

"The shift to large-caps is imminent. It is becoming a consensus call, as small- and mid-caps have run up way ahead of fundamentals while large-caps look reasonable in terms of valuations," said Pramod Gubbi, co-founder of Marcellus Investment Managers.

Bharat Petroleum Corp added 6.6%, extending its post-results jump to the third week, as analysts see room for further rally.

On the day, the Nifty 50 rose 0.59% to 22,040.70, while the Sensex added 0.52% to 72,426.64, led by auto and information technology stocks.