By Bharath Rajeswaran
(Reuters) -Indian shares reversed losses to end higher on Tuesday as investors sought safety in heavyweight financials that are considered to have cheaper valuations, ahead of the tightly-fought U.S. presidential election.
The NSE Nifty 50 rose 0.91% to 24,213.3, while BSE Sensex gained 0.88% to 79,476.63.
The benchmarks fell about 0.6% each during the session, before reversing course in the final two hours.
Slowing corporate earnings and record monthly foreign outflows have weighed on domestic equities over the last five weeks, with the Nifty 50 dropping about 8% from record highs hit on Sept. 27.
On Tuesday, financials rose about 2%, with top private lender HDFC Bank, the heaviest stock in the Nifty and Sensex, advancing 2.6%.
"The buying in financials which lifted markets higher in the session is due to a strategy adopted by investors to park their funds in segments with valuation comfort for safety ahead of key events like the U.S. presidential election," said Aishvarya Dadheech, chief investment officer at Fident Asset Management.
Democrat Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls ahead of Tuesday's U.S. election. The winner will likely not be known for days after voting ends.
A Trump win could lead to lower corporate tax rates in the U.S., which is expected to boost spending and, in turn, benefit several equity sectors in India, according to analysts. A Harris victory, meanwhile, is seen as a sign of policy continuity, a neutral-to-mildly-positive outcome for Indian stocks, they said.
Eleven of the 13 major sectors advanced on the day. The broader, more domestically focused small- and mid-caps gained about 0.5% each. .
The metals index rose 2.8%, leading sectoral gains, aided by a subdued U.S. dollar and on expectations of demand recovery in top consumer China.
Improving Chinese demand is a positive for metal prices and, in turn, for global metal firms. [MET/L]
($1 = 84.1360 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy, Janane Venkatraman and Sonia Cheema)