Mumbai: Indian shares closed 0.2% higher on Tuesday, led by gains in Reliance Industries and outsourcers, with firm global markets boosting sentiment.
However, trade was volatile ahead of the expiry of monthly derivative contracts on the National Stock Exchange on Thursday.
Indian markets are closed on Wednesday for a public holiday.
The BSE 30-share index Sensex closed 0.23%, or 40.45 points, higher at 17,451.02, with 14 of its components advancing.
“The scene broadly looks good from here on S&P (Standard and Poor’s) upgrading our rating outlook, bumper prospects for winter crop, expectations of good March quarter earnings,” said Gajendra Nagpal, CEO of Unicon Financial.
Data from market regulator showed foreign funds have pumped in about $3.4 billion into Indian equities so far this year, after pumping $17.5 billion in 2009.
Energy giant Reliance Industries, which has the highest weight on the main index, gained 1.4% to Rs1,089.25.
Export-oriented software companies rose on improving demand prospects in a recovering world economy.
Sector leader Tata Consultancy Services rose 0.4%, while Infosys Technologies gained 0.7%.
Rival Wipro bucked the trend and shed 1%.
Financials closed mixed as their long-term prospects were considered attractive but the tighter monetary stance weighed on their near-term outlook.
Top lender State Bank of India rose 0.3%, while private lender HDFC Bank closed 2.5% higher.
Leading private lender ICICI Bank and mortgage lender Housing Development Finance Corp fell 1.1% and 0.2%, respectively.
A Reuters poll showed on Monday the central bank was likely to increase rates to a slightly higher level this year than earlier expected after surprising markets late on Friday with a 25-basis-point rise.
“We have an attractive stance on the sector and think a buoyant economy will offset risk of rising rates,” Goldman Sachs said in a note on the financial services sector on Monday.
Top mobile operator Bharti Airtel reversed early gains and declined 3% ahead of the 25 March deadline for its exclusive talks with Zain for the Kuwaiti firm’s African assets.
The stock had gained more than 7% over previous four sessions.
Top vehicles maker Tata Motors tumbled 2.8% to Rs739.05.
Tata Motors said it was offering an early conversion of notes into stock through an auction to help reduce the debt.
“There are concerns over equity dilution. Also, the rate hike is weighing, as it would make loans for vehicles expensive,” said Surjeet Arora, research analyst with brokerage Prabhudas Lillader.
Non-ferrous metals producer Sterlite Industries rose 0.5% on firm copper prices.
Aluminium maker Hindalco rose 0.5%, while Tata Steel, world’s eighth-largest steel maker by output, gained 1.2%.
In the broader market, gainers led losers in the ratio of 1.2:1, while 369 million shares changed hands on the BSE, marginally lower than Monday’s volume.
By 05:16 pm (11:46 GMT), MSCI’s all-country world stocks index was up 0.1%, while the emerging markets sub-index rose 0.3%.
The NSE 50-share benchmark Nifty closed 0.4% higher at 5,225.30 points.