India's benchmark BSE index gained 0.3 percent on Wednesday to approach a record closing high hit last month, extending a recent rally as continued buying by foreign investors boosted stocks of blue chip companies such as ICICI Bank. Overseas investors bought Indian shares worth 1.85 billion rupees ($29.9 million) on Tuesday, extending their buying streak to a 13th consecutive day for a net of about $800 million.
Indian shares were also helped by gains in other Asian markets as a semblance of calm returned after two days of intense volatility with the United States and Russia set to hold talks on easing tensions in Ukraine.
Hopes of a pre-election rally are also expected to help sentiment as shares usually rise a month before the polls begin. Polling will kick off on April 7 and go on until May 12, India's election commission said on Wednesday.
"It is important to see how the markets progress ahead of elections as we have been struggling for sustainability at higher levels for quite some time. However, the situation is in favour of bulls this time so one should continue to uphold long positions and avoid contrarian approach," said Jayant Manglik, President at Religare Securities Ltd.
The benchmark BSE index rose 0.32 percent, or 67.13 points, to end at 21,276.86, near its January 23 record closing high of 21,373.66. The broader NSE index gained 0.49 percent, or 30.70 points, to end at 6,328.65, above the psychologically important 6,300 level.
Banks were among the leading gainers, with the NSE sub-index advancing 1.6 percent, helped by hopes that data next week will show continued easing in inflation, allowing the central bank to keep interest rates on hold.
ICICI Bank Ltd rose 2.8 percent and Axis Bank gained 1.1 percent. Among state-owned banks, Bank of Baroda Ltd surged 6.3 percent while Punjab National Bank ended 4.6 percent higher.
Among other interest rate-sensitive stocks, India's biggest realty developer DLF Ltd rose 3.5 percent while non-banking finance lender, IDFC Ltd, gained 3.2 percent.
Mahindra and Mahindra Financial Services Ltd rose 1.9 percent after Goldman Sachs upgraded the stock to "buy" from "neutral", citing valuations and "overly pessimistic" market expectations on the non-banking financial firm's loan growth and profitability.
Bharti Infratel gained 5.9 percent after the company entered into a tower sharing pact with Reliance Jio Infocomm, Reliance Industries' telecom unit.
However, Reliance Communications fell 0.5 percent after the Bharti Infratel and Reliance Jio Infocomm pact.
Astrazeneca Pharma India Ltd fell 5.3 percent on profit-taking ahead of the company's board meet later in the day to consider a proposal by promoter AstraZeneca Pharmaceuticals AB (AZP AB) Sweden to delist the company.
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