Indian shares closed at their highest in nearly a month, gaining for the fifth straight session on Thursday, with lenders such as State Bank of India rising after rating agency Moody's revised India's sovereign rating outlook.
Moody's revised India's sovereign rating outlook to "positive" from "stable" on Thursday, a step closer to an upgrade of the credit rating, as it expects actions by policymakers to lift the country's economic growth.
The benchmark BSE index gained 0.62 per cent or 177.46 points to 28,885.21 points, its highest closing level since March 12.
The broader NSE index ended 0.73 per cent or 63.90 points to 8,778.30 points, marking its highest close since March 5.
The banking index of the NSE closed up 2.49 percent. State Bank of India closed up 2.54 percent.
A firm trend across the region also helped. Asian stocks rose extending the previous session's gains, while the dollar drew support from minutes of the Federal Reserve's last meeting showing the U.S. central bank was still on course to hike interest rates this year.
"The ratings (outlook) upgrade will give more comfort for foreign investors and also attract more capital. Our fiscal deficit situation is under control and global investors are comfortable with that. The market undercurrent is positive," said Deven Choksey, managing director, KR Choksey Securities.
Also, India's chances of a sovereign rating upgrade over the next 12-18 months is greater as investments are expected to revive, growth to improve and inflation to stay modest, Moody's sovereign rating analyst Atsi Sheth said on Thursday.
Gains were led by Punjab National Bank, up 6.68%, IndusInd Bank (4.88%), Kotak Mahindra Bank, up 4.26 per cent and Bank of India, 3.25 per cent.
The key banking sub-index is down 7.2 per cent since Jan-end on concerns over valuations and expected delay in earnings recovery.
Reliance was up 3.59 per cent at Rs 897.
Broader gains were however capped as healthcare stocks fell with Sun Pharmaceutical Industries falling 3.5 per cent after Bank of America Merrill Lynch (BoFA-ML) downgraded several pharma stocks.
BoFA-ML downgraded Sun Pharma to "underperform" from "buy", while it cut Lupin Ltd amd Cadila Healthcare to "neutral" from "buy". Lupin and Cadila were down 3.27 per cent and 2.76 per cent, respectively.
Brokers said sentiments were bolstered after rating agency Moody’s upgraded India’s credit rating outlook from stable to positive, accelerating buying activity.
Asian markets : MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.8 per cent, after touching its highest level since September 2014.
Hong Kong's benchmark Hang Seng Index surged over 3 per cent at one point to fresh seven-year highs, fuelled by money inflows from mainland China investors who are seeking cheaper shares after a 60 percent rally in Shanghai in the past five months. The Shanghai Composite Index slumped 1.1 per cent.
Japan's Nikkei ended up 0.8 per cent at another 15-year high just shy of the 20,000 level, above which it hasn't traded since April 2000.