Sensex, Nifty rise in line with Asia; RBI policy meeting outcome awaited

By Tanvi Mehta

REUTERS - Indian shares rose on Wednesday in line with broader Asian markets as investors awaited key political and economic events including the monetary policy meeting in India.

The Reserve Bank of India is likely to strike a less hawkish tone while leaving interest rates unchanged at its policy meeting later in the day, according to analysts, as inflation is running well below forecasts and the economy has slowed more than expected. With the UK elections, the European Central Bank's policy meeting, and former FBI director James Comey's Senate testimony all set for Thursday, investors were noticeably risk averse across the globe.

"Markets are not reacting negatively to any of the events... Everything seems right in place," said Jayant Manglik, president, retail distribution, Religare Securities Ltd, adding that the latest monsoon forecast also brought some cheer.

India's crucial monsoon rains are expected to reach 98 percent of the long-term average this year, 2 percentage points higher than the previous forecast, the weather office said on Tuesday.

The broader NSE Nifty was up 0.36 percent at 9,671.45 as of 0536 GMT, a day after breaching the 9,700 level for the first time.

The benchmark BSE Sensex was 0.41 percent higher at 31,317.09, driven by gains in consumer stocks.

Both indexes were headed for a third session of gains in four.

The Nifty Pharma index, which had fallen nearly 11 percent this year as of Tuesday's close, gained as much as 1.6 percent to its highest in nearly three weeks.

Cadila Healthcare jumped as much as 9.9 percent to a record high after Zydus Cadila got the final approval from the U.S. drug regulator for mesalamine delayed-release tablets.

Embattled mobile carrier Reliance Communications Ltd fell as much as 4.5 percent, extending its decline after Moody's and Fitch further downgraded their ratings to default levels and warned about the company's ability to deal with long-term debt.

(Reporting by Tanvi Mehta in Bengaluru; Editing by Subhranshu Sahu)