Indian shares ended higher on Tuesday, with the benchmark BSE index marking its best closing level in nearly a month, after retail inflation rate fell to an 18-month low, raising optimism that the central bank could ease monetary policy next month.
The broader NSE index closed 1.39 percent higher at 10,886.80, its highest closing level since Jan. 1. The benchmark BSE index ended up 1.3 percent at 36,318.33, its best closing level since Dec. 20.
Shares of index heavyweights Infosys Ltd and Reliance Industries Ltd were the top performers, ending 3.5 percent and 3 percent higher, respectively.
India's annual retail price inflation declined to 2.19 percent in December, its lowest level since June 2017, as food prices fell for a third straight month, government data showed on Monday.
The outcome was lower than the 2.33 percent recorded in November and broadly in line with a 2.20 percent increase forecast by economists in a Reuters poll.
Banks also cheered the inflation relief with most of them trading in the green. Yes Bank Ltd rose nearly 5 percent to an over eight-week high, while HDFC Bank Ltd gained up to 0.6 percent.
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