Indian stocks rose to their highest close in almost two weeks on Tuesday, as Bharat Heavy Electricals (BHEL) advanced after posting positive provisional earnings, while lenders gained on anticipation of a rate cut from the central bank this month.
Indian shares have gained for three consecutive sessions, as a rally in global equities sparks hopes foreign investors will continue buying into domestic stocks after already buying a net of about $9 billion in 2012. Optimism about a rate cut from the Reserve Bank of India at its April 17 policy meeting is also prevailing - though similar hopes pushed up stocks in the lead-up to last month's meeting, only for stocks to fall after policy was kept on hold.
"There is a lot of optimism that RBI would cut rates on April 17th and that is why interest rate-sensitive stocks are extending rally, leading the market," said Sajiv Dhawan, managing director at JV Capital Services. The main 30-share BSE stock index rose 0.68 percent to 17,597.42 points, its highest close since March 21. The Nifty gained 0.76 percent to 5,358.50 points.
Lenders advanced for a third day, with the NSE's banking index up 5.1 percent during this period, outperforming the 3.5 percent gain in the broader Nifty. On Friday, State Bank of India rose 1.95 percent, while ICICI bank advanced 1.99 percent. Power equipment maker BHEL ended up 1.3 percent after earlier saying provisional net profit rose 14.3 percent to 68.7 billion rupees ($1.35 billion) for the just-concluded 2011/12 fiscal year.
The results helped boost other capital goods stocks, traders said, with Larsen & Toubro, India's biggest engineering conglomerate, ending up 2.2 percent. Also among gainers, shares of oil explorer Cairn India surged 4.6 percent, tracking gains in crude oil prices and after UBS upgraded the stock to "buy" from "neutral" and raised its target price to 400 rupees from 375 rupees.
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