Indian shares inched higher on Friday as strong monthly sales boosted Hero MotoCorp Ltd and as investor appetite for risky assets improved on bets that the U.S. Federal Reserve could pause its interest rate hikes.
The blue-chip Nifty 50 was up 0.08% at 18,502.65 as of 10:03 a.m. IST, while the benchmark S&P BSE Sensex advanced 0.06% to 62,464.65, after rising half a percent each at open.
For the week, however, both benchmarks are set to close flat.
"We are seeing the domestic market gradually inching towards record highs, with rotational buying seen across sectors including auto, banking and FMCG after strong earnings and expectations of a good monsoon," said Ajit Mishra, senior vice-president of research at Religare Broking.
The Nifty is off just about 2% from all-time highs hit in December and has outperformed MSCI's broadest index of Asia-Pacific shares outside Japan so far this year.
Easing inflation at home, stronger-than-expected economic growth data, and fast-paced expansion of India's factory output have improved investor confidence, analysts have said.
"The tone looks positive, the only challenge was turbulence in global markets but that has eased with progress on the U.S. debt ceiling talks and hopes that the Fed will pause."
Asian peers also climbed, as markets priced in a 20% chance of the Fed hiking rates by 25 basis points in June compared to a 50% chance a week earlier. Progress on the bill to raise the U.S. debt ceiling also aided sentiment.
Two-wheeler maker Hero was the top gainer on the Nifty 50, rising 3.7% after it reported strong domestic sales in May.
Metal producer Hindalco Industries Ltd climbed as much as 2.6% after its U.S. unit entered a deal with Coca-Cola while food delivery firm Zomato Ltd surged 7.7% to its highest since mid-November on block deals.
Losses in IT giant Infosys Ltd and HDFC Life Insurance Ltd capped gains on the Nifty. (Reporting by Chris Thomas in Bengaluru; Editing by Janane Venkatraman)