Indian shares rose to their strongest level since late October on Wednesday as firms reliant on consumer demand, such as cigarette maker ITC, advanced on data showing the economy grew faster than expected in the March quarter. The broader NSE index ended 0.24 percent higher at 8,179.95, while the benchmark BSE index closed up 0.17 percent at 26,713.93. Shares of ITC closed nearly 3 percent higher, after rising as much as 3.18 percent to their highest level since February 28, 2015 earlier in the session.
India gathered momentum from January to March to extend its lead as the world's fastest growing large economy, with gross domestic product expanding at a stronger-than-expected rate of 7.9 percent, government data showed on Tuesday. The strong headline number adds to optimism about India's economy, with shares gaining around 4 percent in May to become Asia's best performer last month on forecasts of an above average monsoon and upbeat earnings from bluechip companies.
Separately, a business survey showed manufacturing activity increased for a fifth consecutive month in May. "I think the GDP data is basically one driving factor...and apart from GDP data it is the earnings growth and allocation of higher sum of money by global FIIs to local markets...all these three factors are definitely playing a role in bringing the market up now," said Deven Choksey, managing director at KR Choksey Securities.
"The GDP has started looking up mainly because of revival of the projects that were stalled in the economy earlier." Shares of ITC and Hindustan Unilever rose more than 1 percent, after the GDP data showed consumer spending rose 8.3 pct in Jan-March from a year earlier. Among other gainers, Axis Bank was up 0.64 percent after earlier hitting its highest since October 26, as the Reserve Bank of India raised the limit for foreign shareholding in the country's third-biggest private lender to up to 62 percent from 49 percent. Airline stocks fell after the government increased jet fuel prices by 9.2 percent. Jet Airways (India) Ltd slipped 2.20 percent, while InterGlobe Aviation Ltd lost 4.54 percent.
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