Indian shares rose for a second consecutive session on Wednesday, extending a rebound, as bargain-hunting investors bought shares in sectors including healthcare that were hit hard in a recent selloff.
The Nifty and the Sensex, which gained about 1.6 percent in the previous session, their biggest in nearly three weeks, had declined in eight out of nine sessions as of Monday's close.
The Nifty hit a seven-month low in the start of the week on worries about capital outflows from emerging markets to the United States after Donald Trump's election win and India's move to ban higher-value currency notes.
But investors are once again picking up shares, although markets are expected to remain volatile given thin trading volumes this week.
"There has been some value-buying," said Jayant Manglik, president of retail distribution at Religare Securities.
"Also a level of short-covering as Tuesday's gains caught all the short-sellers by surprise."
The Nifty was up 0.41 percent at8,065.80 as of 0556 GMT, after rising 1.6 percent on Tuesday in its biggest daily percentage gain since Dec. 8.
The Sensex was 0.32 percent higher at 26,298.91.
Nifty Pharma index, which rose about 2 percent in the previous session, gained as much as 1.34 percent on Wednesday with Piramal Enterprises and Divi's Laboratories posting biggest gains. As of Monday's close, the index had fallen 9.7 percent in the past nine consecutive sessions.
Bharti Infratel, the top percentage gainer on NSE, rose as much as 3.7 percent, after Goldman Sachs upgraded the stock to "neutral" on Tuesday, saying accelerated 4G deployment by telecom companies is likely to result in strong tenancy growth for the company.
Shares of Bharat Financial Inclusion rose as much as 10.5 percent to their highest in nearly a week after the company said on Tuesday that Morgan Stanley units raised stake by 1.1 percent to 7.86 percent on Dec. 23.
(Reporting by Tanvi Mehta in Bengaluru; Editing by Amrutha Gayathri)