By Derek Francis
BENGALURU (Reuters) - Metal stocks pushed Indian shares higher on Thursday ahead of the central bank's monetary policy decision, as gains in broader Asia lifted market sentiment.
Rising inflation was expected to keep the Reserve Bank of India (RBI) from cutting rates again until late this year, a Reuters poll showed last month, as Asia's third-largest economy grappled with its weakest pace of economic growth in more than six years.
The broader NSE Nifty 50 index <.NSEI> was up 0.35% at 12,131.50 by 0354 GMT, while the benchmark S&P BSE Sensex <.BSESN> rose 0.33% to 41,271.24.
The MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> gained 0.39% after the S&P 500 closed at a record high on Wednesday, boosted by upbeat U.S. economic data.
Traders cited unconfirmed reports of a possible vaccine or drug breakthrough for the coronavirus as a trigger for Wednesday's stock rally, although they also said such a catalyst was also likely to be an excuse for short-covering.
The World Health Organization, however, played down media reports of "breakthrough" drugs being discovered to treat people infected with the new coronavirus.
The recovery in global sentiment was driven by hopes that containment efforts and work toward new vaccines could blunt the economic impact of the coronavirus, said Deepak Jasani, head of retail research at HDFC Securities in Mumbai.
Metal stocks were the best performers in the domestic market, with the Nifty metals sub-index <.NIFTYMET> rising about 1%.
Banks also supported the gains, with an index for state-owned banks <.NIFTYPSU> firming 0.6%.
Zee Entertainment <ZEE.NS> advanced 2.78% and led gains in blue-chip stocks, while Tata Motors <TAMO.NS> was the biggest laggard, dropping 1.17%.
Any decision from the RBI would not lead to major movement on either side in the equities markets, said Sunil Damania, chief investment officer at MarketsMojo.com, adding the central bank may not be in a hurry to cut interest rates in 2020.
The 10-year benchmark bond rose to 99.6 rupees from 99.58 rupees, leaving yields largely unchanged, while the rupee weakened 0.08% to 71.22 against the U.S. dollar, ahead of the RBI's decision.
(Reporting by Derek Francis in Bengaluru; Editing by Aditya Soni)
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