Indian shares closed at their highest in more than three weeks on Thursday, with market heavyweights such as Reliance Industries Ltd and ICICI Bank Ltd contributing most to gains. The broader NSE index ended up 0.78 percent at 10,768.35, while the benchmark BSE index ended 0.81 percent higher at 35,463.08.
Reliance Industries posted its sixth straight session of gains to rise 1.7 percent, while ICICI bank snapped a three-day losing streak to end 2.5 percent higher, a day after India's central bank raised its policy rate for the first time in over four years.
Growing inflation concerns prompted the Reserve Bank of India's Monetary Policy Committee (MPC) to lift the repo rate by 25 basis points while maintaining its "neutral" stance instead of changing to "tighten".
The rate hike is a negative but markets are recovering due to short-covering, since people sold off their positions at higher levels prior to the RBI meet and are now covering their positions at lower prices, said Sumit Pokharna, vice president, Kotak Securities.
"Investors were anticipating a rate hike due to depreciation of the rupee, major selling in the debt markets and rising inflation on concerns over crude prices," he added.
The Nifty private bank index rose as much as 1.5 percent. Axis Bank and ICICI Bank jumped over 2 percent each while HDFC Bank Ltd was up 1 percent. Index heavyweights such as Reliance Industries Ltd and Infosys Ltd climbed 1 percent each.
Shares of Hindustan Unilever Ltd rose as much as 1.7 percent after brokerages reaffirmed their confidence in the company's growth strategy following the consumer goods giant's annual analyst day on Wednesday.
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