Markets rise on positive cues; Fed decision looms

MUMBAI (Reuters) - India's stock markets got a lift from upbeat Asian markets on Wednesday, inching towards their highest close in over two weeks even as the possibility of the U.S. Federal Reserve hiking interest rates for the first time in almost decade loomed.

Global investors are divided about the likelihood of a rate increase by the Fed at its two-day meeting starting later in the day, and U.S. economic data published on Tuesday did little to either back, or douse, expectations of one.

"Once this uncertainty is over, markets will take off," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Indian investors are also hopeful that the Reserve Bank of India (RBI) would cut interest rates for a fourth time this year at its policy review on Sept. 29, after data earlier this week showed consumer inflation easing to the lowest on record.

The BSE Sensex gained 1.07 percent while the 50-share Nifty rose 0.96 percent heading towards their highest close since Aug. 31.

Financial stocks led the gains. Housing Development Finance Corp rose 1.3 percent, ICICI Bank gained 1.6 percent while Axis Bank was up 2.7 percent.

Sun Pharmaceutical Industries gained over 2 percent on its acquisition of InSite Vision, an ophthalmic products drugmaker. Cadila Healthcare jumped 5.8 percent while Lupin was up 1 percent.

Export-oriented IT and pharma stocks were trading higher after overnight data in the U.S. showed healthy growth in consumer spending. Infosys was up 0.5 percent while HCL Tech rose 1.4 percent.

(Reporting by Karen Rebelo in Mumbai; Editing by Sunil Nair)