Sensex rises more than 350 points; Wall Street recovery boosts sentiment

REUTERS - India's stock markets rose more than 1 percent on Thursday, heading for their biggest single-day gain in nearly two weeks, as a sharp rebound on Wall Street last night eased fears of a protracted global market rout.

Sentiment was also supported by comments from New York Fed President William Dudley on Wednesday that the prospect of a September rate hike "seems less compelling" than it was only weeks ago, given the threat posed to the U.S. economy by the recent market turmoil.

A positive close for Wall Street and some amount of buying on the last day of the August futures and options contracts helped the market move higher, said Alex Mathews, head of research at Geojit BNP Paribas.

Mathews said he expects some choppiness in the second half of trade as traders are expected to churn positions.

The benchmark BSE Sensex was up 1.13 percent after rising as much as 1.77 percent earlier in the day, while the broader Nifty was 1.14 percent higher after gaining as much as 1.78 percent earlier.

Financial stocks bounced back from losses in the previous session. Housing Development Finance Corp gained 6 percent, ICICI Bank rose 1.55 percent and Kotak Mahindra Bank added 3.5 percent.

IT stocks were also trading higher, with Infosys up 2.11 percent and HCL Tech rising 1.9 percent.

Pharma stocks too edged up. Sun Pharma rose 1.4 percent, Lupin gained 2.8 percent and Cipla climbed 3.5 percent.

Cairn India shares gained as much as 8.1 percent on higher crude prices and cheaper valuation.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)