Indian share prices rose 1.3 percent on Wednesday on bargain-hunting by overseas funds, bucking a weaker global trend driven by worries about the financial sector, dealers said. They said local sentiment improved on expectations that the ruling Congress government would not allow inflation and food prices to spiral out of control.
The benchmark Mumbai Sensex index rose 202.89 points to 15,790.51. India's annual inflation rate rose to a three-year high of 7.0 percent for the week ending March 22 from 6.68 percent a week earlier, official data showed last week.
The bank is due to hold its next monetary policy meeting on April 29 but analysts say it could act sooner. India's interest rates are at a six-year high and the cash reserves for banks at 7.5 percent, to curb liquidity and check rising inflation.
"Bottom-fishing by overseas funds pulled the markets up. Global factors are, however, still not encouraging," said Bhaskar Kapadia, partner at brokerage Pyramid Securities. Private sector HDFC Bank rose 71.75 rupees or 5.5 percent to 1,376.05.
The world's sixth-largest steelmaker Tata Steel rose 22.6 rupees or 3.44 percent to 678.9 rupees, amid high global steel prices. India's second largest software exporter Infosys rose 18.6 rupees or 1.27 percent to 1,479.9, ahead of its fourth-quarter earnings data next week.