Indian shares rose 0.8 percent on Tuesday, climbing for the first time in three sessions, as export-focused software services companies rebounded on the back of upbeat earnings from peer IBM. A modest recovery in world equities also underpinned the market, traders said, though the outlook remained clouded by debt woes in Europe and the United States.
Foreign funds have bought beaten-down Indian shares worth about $2.6 billion over the past three weeks, but the inflow is slowing. HDFC Bank rose as much as 0.8 percent to an all-time high of 519 rupees after the third-largest lender reported a forecast-beating 34 percent rise in its June quarter net profit.
Profit-taking later erased the gains and the stock closed down 0.8 percent.
The 30-share BSE index closed up 0.79 percent or 146.83 points at 18,653.87, with 24 components advancing.
The benchmark, however, is down 9 percent year-to-date after a spate of rate increases to fight stubbornly high inflation dented growth in Asia's third-largest economy.
The 50-share NSE index firmed 0.8 percent to 5,613.55. More than 1 share advanced for every share that declined on the NSE, where 521 million shares hanged hands, lower than the 90-day daily average volume of 576 million shares.
The central bank is expected to raise rates again next Tuesday, which would be the 11th increase since mid-March 2010. Leading software firms Tata Consultancy Services , Infosys , and Wipro climbed between 0.4 percent and 1.4 percent, on optimism over the sector's prospects after peer IBM's robust results. Top lenders State Bank of India and ICICI Bank rose 1.5 percent and 1.4 percent respectively.