Indian shares shrugged off a momentary jolt from rising Indo-China border tensions to finish higher on Tuesday, as hopes of a fresh liquidity boost from the US Federal Reserve lifted global risk sentiment.
The NSE Nifty 50 index ended 1.02% higher at 9,314.00, while the benchmark S&P BSE Sensex closed up 1.13% at 33,605.22.
The rupee ended at 76.21 against the dollar after earlier falling to 76.30, its lowest since April 28.
Both the stock indexes rallied more than 2% in early trade before reversing their course to fall over half a percent after the Indian army said one of its officers and two soldiers were killed in a "violent faceoff" on a contested border.
Global stocks rose after the US Federal Reserve said it would start purchasing a diversified range of investment grade US corporate bonds on Tuesday, in a bid to secure companies' access to cash and ensure credit market liquidity amid the COVID-19 pandemic.
Global liquidity, driven mainly by stimulus in the United States and Europe, has propelled buying from foreign institutional investors in Indian markets, analysts said.
Japan's Nikkei jumped nearly 5%, while Asian equities saw its best day since late March.
"There was some volatility when news of China came out but those concerns were outweighed soon by the global optimism over the Fed move," said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.
In Mumbai trading, the top three gainers on the Nifty 50 index were financial stocks. HDFC Bank Ltd closed up 4.3% in its best day since May 28. ICICI Bank Ltd finished the session 3.58% higher, while Housing Development Finance Corporation (HDFC) closed up over 4%.
Meanwhile, a rebound in oil prices amid signs of improving demand and declining production also helped the positive momentum.
Among losers, Tata Motors Ltd finished the session nearly 6% lower, marking its worst session since May 4.
