HDFC Bank leads Indian shares to record closing highs

FILE PHOTO: A man walks out of the Bombay Stock Exchange building in Mumbai, India,

By Bharath Rajeswaran and Hritam Mukherjee

BENGALURU (Reuters) -Indian shares logged record closing highs on Wednesday led by gains in top private lender HDFC Bank, as investors bet on the stock's weightage in a key global index being increased.

The NSE Nifty 50 settled 0.67% higher at 24,286.5 points, while the S&P BSE Sensex added 0.69% to 79,986.8 points.

The 30-stock Sensex also topped the 80,000 mark for the first time.

HDFC Bank led gains on both indexes, rising 2.2%. Those gains powered banks, financials and private banks 1.7%-2.1% higher.

Market participants are expecting the lender's weightage in the MSCI Emerging Markets index to rise to upto 7.8% in an expected rejig in August, from the 3.8% it holds currently.

"The weight increase could be a positive near-term catalyst for the stock as it will lead to passive inflows and trigger further foreign investor ownership," said analysts at Macquarie.

Analysts estimate inflows worth $3.2 billion - $4 billion into HDFC Bank due to the expected move. They also expect HDFC Bank to aid the momentum in benchmarks in the near-term.

The broader, more domestically focussed small- and mid-caps rose 1.03% and 0.79% respectively.

"Compared to the small- and mid-caps, valuations in the large-cap space are reasonable," said Poonam Tandon, chief investment officer at IndiaFirst Life Insurance, adding that quarterly results, the national budget and monsoons will influence the markets in the near term.

In individual stocks, Bharat Heavy Electricals rose 4.76% after Reuters reported that the power equipment maker will likely bag most of the new contracts that Indian power firms will commission, following a government directive.

Power financiers REC and Power Finance Corporation gained 4.28% and 5.65%, respectively, after Bernstein initiated coverage on the stocks with an "outperform" rating.

ICICI Lombard added 2.51% after an upgrade from brokerage CLSA.

(Reporting by Bharath Rajeswaran and Hritam Mukherjee in Bengaluru; Editing by Sonia Cheema and Nivedita Bhattacharjee)