Indian shares gained 0.92 percent on Monday after two straight sessions of losses, as hopes for a solution to the eurozone debt crisis encouraged investors, and helped them shrug off the possibility of an interest rate increase by the central bank. The Reserve Bank of India is widely expected to deliver one final interest rate increase at its policy review on Tuesday and then pause until the end of the fiscal year in March, a Reuters poll showed.
Battered-down stocks in India's showpiece information technology sector gained, with investors hoping that a stable global economy will boost corporate IT spending. Market leader Tata Consultancy Services gained 2.9 percent, while industry bellwether Infosys Ltd jumped 1.6 percent.
The benchmark 30-share BSE index closed up 153.64 points at 16,939.28, with 7 of its components in the red. The index, which rose as much as 1.9 percent earlier, is still down nearly 17.4 percent in 2011. The broader 50-share NSE index closed 0.96 percent up at 5,098.35 points. There were 1.3 gainers for every decliners in the broader market, where 478.7 million shares changed hands.
State-run lender Union Bank Of India slumped 11.4 percent after its July-September results disappointed, and non-performing assets rose. Bank stocks fell 0.4 percent, with top lender State Bank of India losing 2 percent. Maruti Suzuki, India's top carmaker, rose 1.6 percent, while Mahindra & Mahindra, India's largest utility vehicles maker advanced almost 1 percent.
Airline stocks rose on hopes the government will approve a plan to allow foreign airlines to buy stakes in Indian carriers. Kingfisher Airlines gained 0.44 percent, while Spicejet rose 3.7 percent. Jet Airways, India's largest carrier by market share, rose 0.77 percent.