Indian shares rise 2% as banks, metals surge

Gardeners work outside the National Stock Exchange (NSE) building in Mumbai, India, August 16, 2018. REUTERS/Francis Mascarenhas

BENGALURU, Oct 4 (Reuters) - Indian shares rose 2% on Tuesday, led by gains in banks and metal companies, as an attempted bounce in global equities and upbeat quarterly updates from companies lifted investor sentiment ahead of the corporate earnings season.

The NSE Nifty 50 index (.NSEI) rose 2% to 17,234.55 as of 0515 GMT and the S&P BSE Sensex (.BSESN) gained 2% at 57,941.14.

Meanwhile, crude prices inched higher, leaving domestic investors wary of inflation heating up in the world's third-largest oil importing country.

Asian stocks bounced on Tuesday after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment, rallying bonds and the pound.

The Nifty metals index (.NIFTYMET) and the bank index (.NSEBANK) surged 2.6%, each.

"Our markets and economy are much more resilient than the rest of the world. It is expected that the credit growth will be much better in the second half of the year and that's the reason we are seeing good amount of buying in banks," said Saurabh Jain, assistant vice-president, research, at SMC Global Securities.

IndusInd Bank (INBK.NS) shares rose 5% after it posted an 18% jump in net advances in the second quarter . It was the top gainer in Nifty 50 index.

Shares of Mahindra and Mahindra Financial Services (MMFS.NS) surged 10% after the company reported strong disbursement for September and improved collection efficiency.

"Earnings will be the major driver of markets for the next few weeks, with more stock-specific moves. Banks, capital goods and consumer companies are expected to shine more," SMC's Jain said.

Foreign institutional investors (FII) turned net buyers in the beginning of the week, purchasing 5.91 billion rupees ($72.48 million) worth of domestic equities on Monday, provisional data available with the National Stock Exchange showed.

FIIs sold $1.99 billion of shares last week, as per Refinitiv Eikon data. September saw net FII equity outflows of $903.08 million, compared with $6.44 billion of inflows in August, according to Refinitiv.

Reporting by Nallur Sethuraman and Gaurav Dogra in Bengaluru; Editing by Subhranshu Sahu, Savio D'Souza and Dhanya Ann Thoppil

Our Standards: The Thomson Reuters Trust Principles.