BENGALURU: Indian shares rebounded in the final two hours of trade on Wednesday, led by a jump in public sector enterprises on the back of comfortable valuations while a drop in IT stocks after hot US inflation data capped the gains.

The NSE Nifty 50 index rose 0.45% to 21,840.05, while the S&P BSE Sensex settled 0.39% higher at 71,833.17.

Both the blue-chip indexes had lost about 1% earlier in the session.

“Domestic markets staged a recovery, buoyed by renewed buying interest in banking stocks,” said Vinod Nair, head of research at Geojit Financial Services, adding that improving asset quality and government’s focus on fiscal prudence made state-owned banks attractive.

Barring IT and pharma, sectors that earn a significant share of revenue from the US, all the other 11 major sectors advanced.

Public sector banks added 3.24%, led by a 4.20% jump in India’s top state-owned lender State Bank of India.