Sensex rebounds on hopes Fed will retain stimulus

MUMBAI (Reuters) - The BSE Sensex rose on Wednesday, recovering from nearly 2-1/2-week lows hit in the previous session, as hopes the U.S. Federal Reserve would keep its stimulus measures boosted exporters such as Infosys Ltd and other blue chips.

Shares, along with their Asian counterparts, also benefited after China's central bank injected $81 billion into banks to stimulate the world's second-largest economy.

The Fed meeting will end later in the day and any pledge to continue low rates could raise hopes of additional foreign flows into emerging markets such as India.

Foreign investors who have been key behind the benchmark indexes marking record highs last week have bought Indian shares worth of $14.26 billion in 2014, so far.

"Tone of Fed chief is under intense scrutiny. If it is subdued then expect a rebound across emerging markets including India," said Deven Choksey, managing director at K R Choksey Securities.

The benchmark BSE Sensex rose 0.52 percent, or 138.78 points, to end at 26,631.29, rebounding from its lowest intraday level since Aug. 26 hit on Tuesday.

The broader Nifty gained 0.54 percent, or 42.60 points, to end at 7,975.50, marking its biggest single-day gain since Sept. 8.

Exporters led the gains on hopes of being safe bets ahead of U.S. Federal Reserve's policy outcome at 1800 GMT.

Infosys rose 2.5 percent, Tata Motors Ltd ended 1.4 percent higher, while Dr.Reddy's Laboratories Ltd gained 2.4 percent.

Among other blue-chips, Reliance Industries Ltd rose 0.9 percent, while ITC Ltd ended up 0.5 percent.

Metal shares advanced after China's economic stimulus raised hopes of a boost in demand from the World's largest consumer.

Tata Steel Ltd gained 1.7 percent, Hindalco Industries advanced 0.2 percent and JSW Steel rose 2.8 percent.

Yes Bank gained 1.9 percent after domestic rating agency ICRA upgraded the lender's debt ratings for six categories.

Eros International Media gained 2 percent after rival Shemaroo Entertainment Pvt's IPO is seen pricing at higher multiples.

However, among stocks that fell, Future Retail Ltd lost 1 percent on profit-taking after rising 8.1 percent over the previous two sessions.

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)