Mumbai:India's benchmark stock-index had the biggest gain in more than a week, led by energy companies and industrials, as the rupee reversed losses and oil dropped.
Oil & Natural Gas Corp., the country's biggest explorer, surged 4.3 per cent, helping a gauge of 10 energy companies to its biggest gain in a week. Reliance Industries, owner of the world's largest refining complex, rose for the first time in six days. Axis Bank had the steepest gain in a month.
The S&P BSE Sensex added 1.3 per cent to 25,521.19 at the close, rebounding from an intraday loss of 0.3 per cent in the final hour. The gauge fell for two days through Monday on concern rising oil prices and forecast for below average rain will undermine Prime Minister Narendra Modi's efforts to revive economy growth. Foreigners have bought a net $9.9 billion of local shares this year, the most among eight Asian markets tracked by Bloomberg.
"It's go to do with liquidity from abroad, and every time the market corrects that liquidity comes and there's a spike," Ajay Srivastava, managing director of Dimensions Consulting, said in an interview with Bloomberg TV India on Tuesday.
Oil & Natural Gas rallied to the highest since June 9 and Reliance ended a five-day, 5.1 per cent retreat. The S&P BSE India Oil Index surged 2.9 per cent.
Axis Bank rallied to a one-week high. State Bank of India gained 2.8 per cent.
The S&P BSE Mid-Cap Index rose 1.5 per cent, the steepest advance in a week, and an index of 446 small-sized companies gained two per cent, the highest level since June 12. The indexes have rallied at least 36 per cent this year, faster than the 20 per cent gain in Sensex.
Brent crude, a benchmark for India, fell for a second day on signs violence in Iraq may not hurt the nation's oil supply. It increased 4.4 per cent last week, the most since July. India imports almost 80 per cent of the oil it uses and an increase in energy costs can exacerbate price pressures.
India's rupee rose, snapping two days of losses, on speculation exporters repatriated earnings to take advantage of the currency's drop to a seven-week low.
The rupee gained 0.2 per cent to 60.0187 in Mumbai, according to prices from local banks compiled by Bloomberg. It fell as much as 0.6 per cent earlier to 60.5250, the weakest since April 29, after dropping 1.5 per cent in the previous two days. A weaker rupee boosts the value of overseas earnings in local-currency terms.
"The rupee reversed the losses as exporters were seen selling dollars," said Naveen Raghuvanshi, a Mumbai-based currency trader at DCB Bank. It was also buoyed by an increase in local stocks, he said.One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, rose 14 basis points, or 0.14 percentage point, to 8.30 per cent, according to data compiled by Bloomberg.