MUMBAI (Reuters) - The BSE Sensex rallied around 1 percent, in a sharp turnaround from earlier mild losses after the leaders of Germany, France, Russia and Ukraine reached a deal to end fighting in eastern Ukraine, sparking gains in global markets.
Traders also cited relief after India's Finance Minister Arun Jaitley vowed to continue with economic reforms, despite a setback for the ruling party in the recently concluded Delhi State elections.
The developments helped overcome earlier falls by bank shares over concerns that the country's largest lender, State Bank of India may post lower-than-expected December-quarter earnings on Friday.
"Two things helped markets, one the Russia and Ukraine agree ceasefire, second the assurance by finance minister that the government will go ahead with the reforms," said Deven Choksey, managing director at K R Choksey Securities.
The Nifty rose 0.98 percent to 8,711.55, marking its third consecutive daily gain, after earlier falling as much as 0.33 percent.
The BSE Sensex rose 0.95 percent to 28,805.10.
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Gains were led by drugmakers such as Dr. Reddy's Laboratories Ltd
Dr. Reddy's gained 5.7 percent, while Cipla ended 3.8 percent higher.
Lenders even reversed earlier falls, with ICICI Bank
(Reporting by Himank Sharma and Dipika Lalwani; Editing by Anand Basu)