Indian shares rose for the third straight session on Wednesday, up 2 percent to their highest level in more than six months, as falling inflation bolstered appetite for shares in interest rate sensitive sectors such as banks, automobiles and infrastructure. Data on Tuesday showed India's wholesale price index (WPI) rose a slower-than-expected 6.55 percent in January -its lowest level in more than two years-leading to a rally in automakers and financials on hopes of interest rate cuts.
The top gainer on Wednesday was Tata Motors, which rose 7.4 percent to close at its life high of 287.85 rupees. The company reported a better-than-expected 40.5 percent rise in December quarter net profit on Monday. Its global vehicle sales rose 21 percent in January led by strong sales of its luxury Jaguar Land Rover vehicles. The stock, which was split into five in July-September last year, fell nearly 32 percent in 2011.
The main 30-share BSE stock index rose 353.84 points to close at 18,202.41 on Wednesday, its highest close since August 1, 2011. Twenty-seven of its components advanced. The main index has risen more than 17 percent this year, with foreign institutional investors buying about $4.2 billion of Indian equities. However, analysts are cautious. Top car maker Maruti Suzuki rose 2.8 percent and Mahindra & Mahindra rose 2.4 percent.
ICICI Bank rose 4 percent to lead gains while top lender State Bank of India rose 2.3 percent. HDFC Bank was up 2.9 percent. Engineering conglomerate Larsen & Toubro jumped 5.5 percent and construction company Jaiprakash Associates rallied 8 percent. Adani Power surged 13.8 percent, Reliance Power 12.9 percent, Tata Power 5.9 percent and JSW Energy more than 7 percent.
Energy major Reliance Industries fell 1.44 percent to 836.65 rupees. HSBC downgraded Reliance to underweight from neutral in the backdrop of the recent stock run-up in response to the company's share buyback announcement. State-run explorer Oil and Natural Gas Corp extended gains and rose 1.1 percent.
Power equipment maker Bharat Heavy Electricals Ltd rose 4.6 percent after federal Heavy Industries Minister Praful Patel said follow-on share sale in the company would happen in the next fiscal year starting April. The 50-share NSE index was up 2.14 percent at 5,531.95. There were 2.4 gainers for every loser in the broader market on a heavy volume of 1.31 billion shares.