Sensex hits over 2-1/2-month closing high; HDFC Bank gains

(Reuters) - Indian shares closed at their highest levels in two-and-a-half months on Tuesday as banks rallied on expectations for stronger earnings, while hopes for economic incentives at the annual budget next week lifted sentiment.

The broader NSE index closed up 1 percent at 8,475.80. Earlier in the session, it hit 8,480.95, its highest since Nov. 10, 2016.

The NSE Nifty broke above a resistance at 8,463 points, the 23.6 percent Fibonacci retracement level on the uptrend from Feb. 29, 2016, low of 6,825.8 to Sept. 7, 2016, high of 8,968.7 a day prior to the derivatives expiry.

The benchmark BSE Sensex ended up 0.95 percent at 27,375.58.

HDFC Bank closed 1.84 percent higher, building on earlier gains, after reporting better-than-expected quarterly results.

For the midday report, click

(Reporting By Darshana Sankararaman in Bengaluru; Additional reporting by Gaurav Dogra, Editing by Sherry Jacob-Phillips)