NEW DELHI (Reuters) - Indian shares rose more than 2 percent on Wednesday morning on lower oil prices and gains in global markets, pulling back some of the sharp losses incurred after the Reserve Bank of India (RBI) had tightened policy more than expected.
Top private firm Reliance Industries rose 2 percent and No. 2 lender ICICI Bank firmed 3.6 percent, contributing most to the market's rise. These two stocks account for about 23 percent of the main index.
Other Asian markets rallied on Wednesday as investors joined Wall Street's optimism that the worst news from U.S. banks might be over, and took heart from a strengthening dollar and falling oil prices.
"The drop in oil prices has caused the feel-good factor for all international markets and our market is also reacting. But it will be difficult to sustain such buoyancy till the end of the day," said Vinod Bansal, director at Ficuswealth.
"Growth concerns are there and companies will be feeling the hit of rising interest rates, especially real estate and automobile, which will be confirmed when we see July-September results."
At 11:01 a.m., the 30-share main BSE index was up 2.29 percent, or 315.86 points, at 14,107.40, with all but two components rising. On Tuesday, the index had fallen 3.9 percent to its lowest close in more than a week.
The RBI on Tuesday raised its key lending rate for the third time in two months, increasing the repo rate by 50 basis points to a seven-year high of 9.0 percent, and also raised the cash reserve ratio by 25 basis points to contain double-digit inflation.
Banking stocks, which had been battered after the rate rise, found some buyers on Wednesday. HDFC Bank rose 5.1 percent to 1,081 rupees and top lender State Bank of India was up 2.8 percent at 1,358 rupees.
The BSE bank index rose 3.7 percent after an 8.3 percent fall on Tuesday.
Tata Steel, which reports quarterly results on Thursday, was up 5.9 percent at 618.50 rupees. Profit at its Indian operation are forecast to have risen 4.9 percent in the June quarter, a Reuters poll showed.
Mobile operators Bharti Airtel and Reliance Communications both rose more than 3 percent. Bharti last week posted forecast-beating quarterly profit last week and Reliance Communications is forecast to report a 24 percent rise in net profit on Thursday.
In the broader market, 1,563 gainers outpaced 481 losers on volume of 86.1 million shares.
The 50-share NSE index was up 1.78 percent at 4,264.70.
Elsewhere in the region, Karachi's 100-share index rose 3.47 percent to 10,811.03 as the market priced in Tuesday's rate hike. Colombo's All-share index was up 0.13 percent at 2,411.89.
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