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Indian shares hit two-week highs boosted by metals, financials

A bird flies past the Bombay Stock Exchange building in Mumbai

By Rama Venkat

BENGALURU (Reuters) - Indian stocks on Wednesday closed at their highest levels in over two weeks, lifted by metals and financials, while foreign investors buying domestic stocks further boosted sentiment.

The Nifty 50 index closed 0.62% higher at 18,165.35, while the S&P BSE Sensex rose 0.64% to 61,045.74, extending gains for the second straight day.

The 30-stock gauge settled above 61,000 for the first time since Jan. 3.

Metal stocks advanced over 1.6%, benefitting from China's flurry of policies, rolled out to assist homebuyers and property developers and relieve a long-running liquidity squeeze in the industry.

"This will boost demand for construction materials and ultimately for metals," said Saurabh Jain, assistant vice-president, research, at SMC Global Securities.

Brokerage firm CLSA upgraded several metal stocks, including Tata Steel and chose Hindalco Industries as the top sectoral pick on hopes of demand recovery in China, the top metals consumer in the world.

Both Hindalco Industries and Tata Steel were the top gainers on the Nifty 50.

Heavyweight HDFC Bank led the gains on the Nifty 50, rising 1.77% to extend gains from the previous session after it reported an 18.5% jump in third-quarter profit over the weekend.

The uptick in HDFC Bank and its parent Housing Development Finance Corporation lifted high weightage financials, which climbed 0.80% and supported the rise in benchmarks.

HDFC Bank was the first major domestic bank to report results over the weekend and set the stage for a robust quarterly performance from banks.

Meanwhile, foreign institutional investors snapped their 17-day sales run, the longest streak in six months, purchasing 2.11 billion rupees ($25.85 million) worth of equities on a net basis on Tuesday. They had sold shares worth 246.51 billion rupees ($3.02 billion) since Dec. 23.

Domestic valuations were not cheap after India outperformed major global benchmarks last year, analysts have said.

With China reopening its borders, funds are being reallocated to those markets where valuations are relatively attractive, they added.

The blue-chip Nifty 50 index added 4.33% in 2022, while the MSCI's gauge of stocks across the globe slumped 19.8%.

($1 = 81.6300 Indian rupees)

(Reporting by Rama Venkat and Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Nivedita Bhattacharjee)