Indian shares rose 1.6 percent to their best close in nearly two weeks on Tuesday, bolstered by a rally in global equities after US consumer spending data eased concerns about the health of the world's largest economy. The gains were underpinned by data that showed India's economy grew at 7.7 percent in the June quarter, its weakest pace in six quarters but better than gloomier predictions.
Investors were, however, circumspect ahead of a two-day market holiday. The main stock index fell 8.4 percent in August, its second straight monthly drop and the biggest percentage decline since January as rising rates and global economic uncertainty triggered a flight from risky assets.
Shares in index heavyweight Reliance Industries were the biggest gainer, rising 3.7 percent to 782.60 rupees on bargain hunting by institutional investors after the recent sell-off, dealers said. Still, the stock ended down 5.5 percent for the month, taking its losses to 26 percent so far this year.
Infosys, India's No 2 software services exporter, gained 2 percent to 2,342.95 rupees as the encouraging US data boosted prospects for outsourcing demand in its largest market. The $5.2 billion HSBC GIF Indian Equity fund has recently bought Infosys and ICICI Bank shares, catapulting them into its top-10 holdings, its portfolio manager Sanjiv Duggal told Reuters.
The benchmark 30-share BSE index closed up 1.59 percent, or 260.42 points, at 16,676.75, after having risen as much as 1.8 percent during trade, with 24 of its components gaining. The index is down nearly 19 percent this year. The broader 50-share NSE index ended up 1.65 percent at 5,001 points. In the broader market, gainers were ahead of losers in the ratio of 2.6:1 on strong volume of 652 million shares. The market is closed on Wednesday and Thursday for local holidays. Trading resumes on Friday.
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