By Vivek Kumar M and Bharath Rajeswaran

(Reuters) -India's benchmark indexes closed higher on Thursday to log their best week in more than four years and erase all their year-to-date losses, led by a rally in heavyweight financial stocks.

The Nifty 50 ended 1.8% higher at 23,851.65, while the BSE Sensex added 1.96% to end at 78,553.2 ahead of the Good Friday holiday.

The indexes rose 4.5% in the holiday-truncated week, while their major Asian peers underperformed due to the uncertainty over U.S. tariffs and worries about their effect on economic growth.

This week, financial stocks rallied on the prospects of healthier net interest margins after top lenders lowered their deposit rates, following the central bank's rate cut.

Besides that, the escalating Sino-U.S. trade war could boost Indian companies' chances in the China-plus one strategy and that could mean higher demand for credit, said Ambareesh Baliga, an independent market analyst.

ICICI Bank and HDFC Bank, the heaviest weighted stock on the Nifty, soared 7.2% and 5.5%, respectively, this week to hit lifetime highs ahead of their earnings release over the weekend.

The market rally coincided with foreign inflows of around 100 billion rupees ($1.12 billion) on Tuesday and Wednesday, as per provisional exchange data.

That gave some relief as foreign portfolio investors have been aggressive sellers recently due to concerns over weak economic and corporate earnings growth as well as U.S. tariffs.

Still, the benchmarks are down around 9% from their lifetime highs in late September.

"The view last year was that India was expensive .... (Another) problem last year was rupee being volatile. From a fund flow (perspective), once investors sense stability in the currency is when we can think of any reversal," said Swarup Mohanty, vice chairman and CEO of Mirae Asset Mutual Fund (India).

All 13 major sectors rose, with the U.S.-reliant information technology and pharma indexes among the top underperformers.

IT services provider Wipro dropped 4.3% on Thursday after it joined market leader TCS in giving a bleak picture for the sector's growth.

(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Savio D'Souza)