Sensex, Nifty rise on banking, IT boost; Dr. Reddy's hits five-week high

BENGALURU (Reuters) - Indian shares on Wednesday notched their best closing levels in nearly three weeks, boosted by gains in large-cap banks and IT firms, while drugmaker Dr. Reddy’s Laboratories jumped on a deal with a Russian fund to cooperate on Moscow’s vaccine trials.

People walk past at a screen displaying India's Finance Minister Nirmala Sitharaman before the budget, on a facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, February 1, 2020. REUTERS/Francis Mascarenhas/Files

The blue-chip NSE Nifty 50 index closed 0.72% higher at 11,604.55, while the benchmark S&P BSE Sensex climbed 0.66% to 39,302.85, both marking their highest close since Aug. 28.

Gains of around 2% each in index heavyweights HDFC Bank Ltd and Infosys Ltd helped India’s benchmark indexes outperform peers in Asia and Europe, where risk appetite was limited ahead of the outcome of the U.S. Federal Reserve’s two-day policy meeting, which ends on Wednesday.

However, a rally in the Nifty Smallcap 100 lost steam after four straight sessions of gains. The Nifty Midcap 50 index ended up 0.29%.

Gains in the Nifty and Sensex came even as concerns lingered about India’s relations with China on their disputed Himalayan border and as total cases of the novel coronavirus surged past 5 million.

Meanwhile, Reserve Bank of India Governor Shaktikanta Das said on Wednesday that while high frequency indicators point to some stabilisation of economic activity in the second quarter of the current year, the recovery was not yet fully entrenched.

“By all indications, the recovery is likely to be gradual as efforts towards re-opening of the economy are confronted with rising infections,” Das told members of the Federation of Indian Chambers of Commerce & Industry’s national executive committee.

Dr. Reddy’s Laboratories ended up 4.2% at its best close in over five weeks after it agreed to cooperate with Russia’s sovereign wealth fund on clinical trials and supply of the Sputnik V COVID-19 vaccine in India.

Mahindra and Mahindra Ltd closed 4.2% higher and lifted the Nifty Auto index 1.53%.

Private sector lender IndusInd Bank Ltd slid 1.9% and was the biggest percentage loser on the Nifty.

Reporting by Anuron Kumar Mitra and Chris Thomas in Bengaluru; Editing by Maju Samuel