Shares advanced on Wednesday, aided by strong quarterly updates from finance companies and banks, while inflation concerns kept investors cautious a day ahead of the Reserve Bank of India's (RBI) monetary policy decision.
The Nifty 50 closed 0.91% higher at 17,557.05, while the S&P BSE Sensex rose 0.99% to 59,689.31. Both the benchmarks have extended gains for a fourth session in a row, the longest winning streak in four months.
Still, analysts expect domestic equities to be muted ahead of corporate quarterly earnings from next week.
"Value stocks will win over growth stocks," said Saurabh Jain, assistant vice president of research at SMC Securities, identifying capital goods, private banks, hotels and infrastructure as preferred sectors.
Eleven of the 13 major sectoral indexes advanced, with high weightage financials and IT rising 1.14% and 1.20%, respectively.
Bajaj Finance Ltd jumped nearly 1% and HDFC Bank Ltd climbed 2.68% after reporting strong new loan growth and deposits growth, respectively, in the previous quarter.
All 10 stocks in the IT index rose, ahead of the earnings season that kicks off next week.
Multinational conglomerate Larsen & Toubro gained over 4% after securing orders worth $852 million, while FMCG major ITC jumped nearly 2% after Axis Securities identified it as a top pick.
Inflation concerns kept a lid on market optimism, however, with the World Bank lowering its forecast for India's economic growth in fiscal 2024 to 6.3% from 6.6%, citing higher borrowing costs and weakness in consumption.
Investors now await the RBI's rate decision on Thursday. Economists expect the central bank to raise rates by 25 basis points (bps) and then pause for the rest of the year, a Reuters poll showed.
The RBI raised rates by 250 bps to 6.50% in the previous financial year.