Mumbai: Indian stocks climbed to a two-week high amid speculation the government will sustain policy steps to revive economic growth. Software makers and energy companies led the advance.
The BSE India Sensitive Index, or Sensex, rose 0.7 per cent to 19,635.72, the highest close since February 6, with most of the gains coming in the last hour of trade.
Volumes in the measure were 35 per cent below the 30-day average. Infosys, the second-biggest software exporter, increased to a 10-month high. ONGC, the nation's biggest state explorer, climbed to the highest level since February 1.
India cut its annual borrowing programme as finance minister Palaniappan Chidambaram curbed spending and raised $4 billion selling stakes in state companies to pare the fiscal deficit.
The moves are part of a wider policy overhaul since September to revive an economy growing at the weakest pace in a decade. Chidambaram is due to present the federal budget on February 28.
"There are some noises about the budget being better than expected and also the fact that the government borrowing has dropped is reassuring because it means the government will be able to meet its deficit targets without extra funds," U. R. Bhat, managing director of Dalton Capital Advisors India in Mumbai, said by phone from Mumbai.
The government canceled a Rs120 billion ($2.2 billion) bond sale due for February 22, the last for the year, according to a statement from the Finance Ministry on Monday. Prime Minister Manmohan Singh's administration planned to borrow a record Rs5.69 trillion this fiscal year before scrapping this week's debt sale, according to budget documents.
Infosys gained 1.5 per cent to Rs2,820, the highest close since April 9, 2012. ONGC increased 3.7 per cent to Rs329.