Indian shares posted gains for fifth straight day after earnings of blue chips such as Hindalco Industries Ltd beat street estimates, boosting hopes that the economy was recovering.

The breadth, a sign of the overall health of the market, was positive.

The 30-share BSE index Sensex ended higher by 72 points or 0.27 per cent at 26,725.60 and the 50-share NSE index Nifty ended up by 21.85 points or 0.27 per cent at 8,178.50.

Among BSE sectoral indices, metal index was the star-performer and was up 2.28 per cent, IT 1.33 per cent, TECk 1.17 per cent and auto 1.11 per cent. On the other hand, realty index was down 1.02 per cent, oil & gas 0.4 per cent, FMCG 0.05 per cent and healthcare 0.02 per cent.

Top five Sensex gainers were Tata Motors (+4.23%), Coal India (+3.8%), Hero MotoCorp (+3.02%), TCS (+2.46%) and NTPC (+2.29%), while the major losers were BHEL (-5.81%), HDFC (-2.16%), Tata Steel (-1.79%), Maruti (-1.65%) and Sun Pharma (-1.57%).

Hindalco Industries shares surged 12 per cent after the company said its net profit more than doubled in the January-March quarter, surprising analysts and beating estimates.

Shares of state-run State Bank of India gained 1.6 per cent after India's biggest lender had on Friday reported quarterly earnings that were worse than expected but said fewer than feared of its loans risked turning sour.

Among decliners, shares of Sun Pharmaceutical Industries fell 1.6 per cent after the US Department of Justice subpoenaed India's largest drugmaker over the pricing and marketing of generic drugs it sells in the United States, as part of a broader investigation

Upbeat earnings

Earnings for the January-March quarter have so far been largely better than street estimates, raising optimism over India's economic prospects, with investors betting that above-average monsoon rainfalls would support rural demand.

However, traders say the current rally could be speculative as foreign investors have been buying very little in cash and that most of their buying has been in index futures and options.

Traders also warned that the gains could be capped by global developments, including the prospect of a US rate hike, even as foreign investors bought 10,330 crore ($1.54 billion) in index futures and options over the past two sessions.

Hemen Kapadia, senior vice president at KR Choksey Securities, said he was surprised at the buying by foreign investors but added that he still expected a correction to follow the gains.

“We have to respect the prices and we think 8,300-8,350 could be seen with a small correction, which is overdue after this stellar rally,” he said.

“Going ahead, US Federal Reserve meeting and Brexit are the key triggers to watch, which will keep upside capped.”

A report by SMC Global said: "Most Asian stocks rose, led by Japan, as the yen weakened amid growing confidence that the US economy is strengthening enough to handle higher borrowing costs as early as this summer. Major US stock indexes rose Friday, notching their biggest weekly gains in months as riskier corners of the markets picked up. The advance came as markets quieted down ahead of a holiday weekend and as investors scooped up shares that were hit hard earlier this year amid worries about the possibility of an economic slowdown. Retail sales in Japan were down 0.8 per cent on year in April, the Ministry of Economy, Trade and Industry reported. That beat forecasts for a decline of 1.2 per cent following the 1.0 per cent fall in March. Sales from large retailers slumped 0.8 per cent on year - also beating expectations for a fall of 1.2 per cent after sliding 1.0 per cent in the previous month. On a seasonally adjusted monthly basis, retail sales were flat - matching expectations after jumping 1.5 per cent a month earlier."

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