Mumbai: Indian shares rose 0.6% to their best close in two months, joining the global markets cheer as the US Federal Reserve maintained its pledge to keep interest rates near zero, and pointed to increased momentum in the recovery of the world’s largest economy.
Financials led the rally on rising optimism of better long-term prospects in a growing economy.
Top lender State Bank of India climbed 0.5% while private lenders ICICI Bank and HDFC Bank gained nearly 2 % and 0.1 % respectively. The 50-share NSE index closed 0.7% higher at 5,231.90.
Mortgage lender Housing Development Finance Corp rose 1.2 %.
The 30-share BSE Index closed 0.61% or 106.90 points higher at 17,490.08, its best close since 18 January. The benchmark is up 6.5% so far in the month.
Twenty two of its components advanced.
“For 2010, the underlying sentiment in the market will be that of good cheer,” said Ved Prakash Chaturvedi, managing director of Tata Asset Management. “We have two things playing out -- fundamental economic recovery and corporate earnings picking up,” Chaturvedi said.
However, concerns over inflation and news flow from the globe may keep the market volatile in the near term, he said.
Foreign funds have pumped in more than $2.5 billion in Indian equities since the start of this month to 12 March, with part of inflows absorbed by primary market offerings.
Larsen & Toubro rose 1.6% to Rs1,623.65 as the top engineering and construction firm said it won an order worth 10.13 billion rupees from state-run explorer Oil and Natural Gas Corp.
Export-oriented software companies rallied, on improving demand outlook on the back of a recovery in world markets, analysts said.
Leading software companies Infosys Technologies and Tata Consultancy Services tested all-time highs at Rs2,751.50 and Rs844 respectively.
TCS closed 1.8% higher at Rs840.70 while Infosys finished the day 0.3% higher at Rs2,739.15. Wipro gained 1.6% to Rs739.60.
Non-ferrous metals producer Sterlite Industries climbed 0.2% as a softer dollar and Wall Street gains propelled copper prices.
Tata Steel, world’s eighth-largest steel maker by output, climbed 0.9% while aluminium maker Hindalco rose 2.3%.
In the broader market, declining shares outnumbered advancing ones in the ratio of 1.3:1, in a volume of 411 million shares, higher than that on Tuesday.
Elsewhere, by 4:07pm, , MSCI’s all-country world index rose 0.7%, and pan-European FTSEurofirst 300 gained 1.1%.