By Abhishek Vishnoi
MUMBAI (Reuters) - The Nifty rose about 1 percent on Tuesday, snapping a five-day losing streak as rate-sensitive stocks such as ICICI Bank surged after consumer inflation in June slowed to the lowest since the figures were published in January 2012.
Data late on Monday showed India's retail inflation eased in June to 7.31 percent from a year earlier after the new government curbed farm exports. However, analysts said the central bank was unlikely to cut interest rates in the near term due to concerns that drought would damage summer crops.
Traders said recent declines in shares that dragged the Nifty down 4.5 percent since hitting a record high on July 8 had also provided attractive entry point.
"Markets saw some inflation numbers led bottom fishing. India remains a buy on dips market. Now is the time to pick up some of the high quality stocks that slipped earlier," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.
The Nifty rose 0.97 percent, or 72.50 points, to end at 7,526.65, after slumping to over five-week low in the previous session.
The Sensex gained 0.89 percent, or 221.67 points, to end at 25,228.65.
ICICI Bank rose 3.8 percent, while Axis Bank rose 2.8 percent.
Among state-run lenders, State Bank of India surged 4.4 percent and Bank of Baroda rose 4.1 percent.
SBI gains were also attributed partly to the bank reducing interest rates on its bulk and retail term deposits.
In other interest rate sensitive stocks, IDFC rose 1.8 percent and DLF advanced 3 percent.
In auto stocks, Mahindra and Mahindra rose 2.9 percent and Bajaj Auto xended up 1.3 percent.
Hindustan Zinc Ltd gained 1.4 percent as zinc prices are near a three-year high, traders said.
Oil and Natural Gas Corp rose 2.5 percent on continued hopes that the government would sell a stake in the state oil firm.
The government will decide next month on the sale of a $3 billion stake, Reuters reported on Tuesday citing a senior oil ministry official.
India's infrastructure and capital goods companies gained after last week's falls were seen as excessive, traders said.
Larsen and Toubro Ltd gained 2.3 percent, while Bharat Heavy Electricals Ltd rose 3.5 percent.
GMR Infrastructure Ltd gained 2.8 percent after falling 17.7 percent in the previous week, while GVK Power and Infrastructure Ltd, which fell 14.6 percent last week, rose 3.6 percent.
Jain Irrigation Systems Ltd gained 2.2 percent after billionaire investor Shivanand Shankar Mankekar bought a 1.86 percent stake, or 8.26 million shares, in the company during the April-June quarter, according to exchange data.
However among stocks that fell, cigarette maker ITC Ltd declined 0.8 percent on profit-taking after rising over 9 percent since its June lows.
(Editing by Anand Basu)
