India gathered momentum from January to March to extend its lead as the world's fastest growing large economy, with gross domestic product expanding at a stronger-than-expected rate of 7.9 per cent, government data showed on Tuesday.
The strong headline number adds to optimism about India's economy, with shares gaining around 4 per cent in May to become Asia's best performer last month on forecasts of an above average monsoon and upbeat earnings from blue chip companies.
Separately, a business survey showed manufacturing activity increased for a fifth consecutive month in May.
"I think the GDP data is basically one driving factor...and apart from GDP data it is the earnings growth and allocation of higher sum of money by global FIIs to local markets...all these three factors are definitely playing a role in bringing the market up now," said Deven Choksey, managing director at KR Choksey Securities.
"The GDP has started looking up mainly because of revival of the projects that were stalled in the economy earlier."
The broader NSE Nifty rose 0.49 per cent to 8,199.80 as of 1:47 p.m., after earlier climbing as much as 0.68 per cent to its strongest since October 27.
The benchmark BSE Sensex rose 0.43 per cent to 26,781.49, after rising earlier to its strongest since Oct. 30.
Shares of ITC and Hindustan Unilever rose more than 1 per cent, after the GDP data showed consumer spending rose 8.3 per cent in Jan-March from a year earlier.
Among other gainers, Axis Bank was up 0.64 per cent after earlier hitting its highest since Oct. 26, as the Reserve Bank of India raised the limit for foreign shareholding in the country's third-biggest private lender to up to 62 per cent from 49 per cent.
Airline stocks fell after the government increased jet fuel prices by 9.2 per cent. Jet Airways (India) Ltd slipped 2.20 per cent, while InterGlobe Aviation Ltd lost 4.54 per cent.
© Thomson Reuters 2016