Indian shares climbed to their highest close in nearly seven months on Tuesday, with lenders among the gainers on expectations the central bank will consider easing banks' reserve requirements to help ease tight cash conditions. Energy conglomerate Reliance Industries rallied 3.1 percent on talk of a likely petrochemical joint venture announcement. The company, which has the heaviest weight on the main index, has called a news conference at 5:30 pm (1200 GMT).
Kingfisher Airlines plunged nearly 20 percent at one stage as the debt-crippled carrier edged closer to the brink after mass cancellation of flights and the resignation of dozens of pilots. The stock, which has slumped about 60 percent since the start of last year, covered the day's losses and ended up 0.4 percent on hopes the carrier would get additional bank finance, analysts said.
The 30-share BSE index rose 0.76 percent, or 139.26 points, to 18,428.61, its highest close since July 27, 2011. Nineteen of its constituents gained. "The expectation from the government is to set the policy framework right on the fiscal side in the upcoming budget which is driving new money into the market," said Deven Choksey, managing director, K R Choksey.
The federal government is scheduled to unveil the annual budget on March 16. The benchmark index is up more than 19 percent this year, mainly on buying by overseas portfolio investors who have pumped in over $4.4 billion so far, after pulling out more than $500 million in 2011. Consumer price data released by the government on Tuesday showed inflation pressures are moderating.
ICICI Bank rose 1 percent and State Bank of India firmed 1.5 percent after a central bank deputy governor said it would consider reducing banks' reserve requirements to help ease tight cash conditions. State-run Oil and Natural Gas Corp rallied 3.8 percent, a day after a local media report said two Gulf wealth funds had pledged to buy up the company's planned 5 percent stake sale.
The market was closed on Monday for a local holiday. Automaker Mahindra & Mahindra climbed 1.9 percent after the company said it is in talks with South Korea's Ssangyong Motor Co to set up an assembly line in Russia. The 50-share NSE index rose 0.77 percent to 5,607.15. In the broader market, gainers beat losers in the ratio of 1.4:1 on heavy volume of 1.12 billion shares.