(Reuters) -Indian shares recovered from a muted start on Thursday, on hopes of policy continuity after early election trends indicated the ruling Bhartiya Janata Party (BJP) would retain power in the key state of Gujarat.
The Nifty 50 index rose 0.23% at 18,602.55, as of 10:45 a.m IST, and the S&P BSE Sensex gained 0.23% to 62,547.91.
Indian Prime Minister Narendra Modi's BJP is headed for a landslide victory in his home state of Gujarat. The party is also hoping to ride Modi's aggressive campaigning to retain power in the small northern state of Himachal Pradesh.
A victory for the ruling BJP would be seen as a positive for the market, as it means policy continuity and political stability ahead of the union budget (early next year), said Avinash Gorakshakar, Head - Research at Profitmart Securities.
Analysts also said that markets would likely remain lacklustre ahead of the rate decision from the U.S. Federal Reserve and U.S. CPI data for November, both due next week.
Among individual stocks in Mumbai, Sun Pharmaceutical Industries fell 3.6%, after the U.S. Food and Drug Administration listed the company's Gujarat facility under an import alert. Besides weighing on both the benchmark indexes, the stock also dragged the Nifty Pharma index down 0.83%, making it the top sectoral loser.
Eicher Motors, Axis Bank, IndusInd Bank, Larsen & Toubro and Mahindra & Mahindra were the top gainers in the Nifty 50 index, rising over 1%.
All the major sectoral indices, barring Nifty IT gained. The Nifty PSU Bank index, which tracks state-owned lenders, climbed as much as 1.7% and was headed for its sixth straight session of gains.
($1 = 82.2040 Indian rupees)
(Reporting by Bharath Rajeswaran and Akansha Victor in Bengaluru; Editing by Eileen Soreng and Janane Venkatraman)