Indian shares rose 1 percent on Thursday, led by technology, auto and cement makers, with sentiment boosted by easing global oil prices, while bonds drooped on strong economic data.
The 30-issue Mumbai share index closed up 1.01 percent at 5,583.61 points, rising more than two percent in as many days. The index rallied 16.4 percent in the three months to September, after two straight quarterly losses.
"A lot of short positions got unwound, which also helped the uptrend," said Suresh Parmar, head of equities trading at local brokerage Darashaw and Co Ltd.
The index had snapped a four-day fall the previous day, during which it had dropped 2.7 percent.
"The undertone is bullish as traders are expecting strong earnings. But there is some caution in the near term as the transaction tax is seen affecting volume," Parmar said.
A tax on share trades will come into effect on October 1.
While declining oil prices soothed sentiment, fund managers said stronger-than-expected GDP growth in the April-June period also helped.
Cement and auto makers gained on hopes of strong shipment growth for September, with figures due out starting Friday.
Grasim Industries Ltd, the nation's top cement group, added 1.7 percent to 1,147.75 rupees. Hero Honda Motors Ltd, the top motorcycle maker, rose 2.6 percent to 447.90 rupees and rival Bajaj Auto Ltd rallied 3.4 percent to 1,024.65 rupees.
Federal bonds weakened from early highs by late Thursday afternoon after the growth data was released.
The benchmark 10-year bond was quoted at 6.2372 percent by late afternoon, up from 6.1571 percent in the morning.
Trading volumes had thinned by the afternoon as key players were inactive on account of the half-yearly closing of accounts.
The foreign exchange market was also largely inactive on account of the closing of accounts.
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