IT stocks, GDP boost drive Indian shares' post-election recovery
Updates at 12:40 p.m. IST
By Hritam Mukherjee and Sethuraman N R
BENGALURU, June 7 (Reuters) -Indian shares continued their post-election recovery on Friday, boosted by a jump in IT stocks and as the country's central bank raised its economic growth expectations while keeping interest rates unchanged, as expected.
The NSE Nifty 50 index .NSEI jumped 1.7% to 23,060 points as of 12:40 p.m. IST, while the S&P BSE Sensex .BSESN had gained 1.8% to 76,384 points after the rate decision.
The Reserve Bank of India (RBI) kept its key interest rate unchanged and raised its real gross domestic product (GDP) growth forecast for the current financial year to 7.2% from 7%.
A three-day rally has helped the market nearly recover from the steep plunge on Tuesday after Prime Minister Narendra Modi's alliance won the general elections by a surprisingly slim majority.
The blue-chip indexes had hit all-time highs on Monday in anticipation of a landslide victory. For the week, the indexes were up about 3%, on track for their best week since week-ending Dec. 1.
"Markets are being helped by emerging clarity on the political front, as well as an upward revision of full-year GDP growth forecast by the RBI," said Anita Gandhi, founder and head of institution at Arihant Capital Markets.
The domestically focussed small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 gained nearly 2% and 1%, respectively.
All 13 major sectors were trading higher.
Heavyweight IT stocks .NIFTYIT gained 3.4% after major central banks kick-started their rate-easing cycle, adding to expectations that the Federal Reserve could follow suit.
The U.S. is a key market for Indian IT companies. The U.S. nonfarm payrolls report, due after the bell, could provide more cues on the trajectory of interest rates.
Wipro WIPR.NS, India's No.4 IT company, advanced 5%, the most on the IT index, after winning an order worth $500 million from a U.S.-based client.
Bajaj Finance BJFN.NS rose 3% after its housing finance unit approved an initial public offering.
Reporting by Sethuraman NR and Hritam Mukherjee in Bengaluru; Editing by Sonia Cheema and Savio D'Souza
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