(Reuters) - Indian stock markets gained for a second straight session on Thursday, heading for their best month in more than four years on buoyant global risk appetite after U.S. Federal Reserve Chair Janet Yellen eased anxiety about potential interest rate hikes.
Risk appetite has improved after Yellen said on Tuesday that the U.S. central bank should proceed cautiously as it looks to hike rates, pushing back against some colleagues who have suggested another move may be just around the corner.
Mirroring the optimism, Asian shares edged up to a four-month high on Thursday, taking cues from Wall Street gains overnight.
Trading was however volatile ahead of the expiry of monthly derivatives at the end of the session. Rollover of contracts were strong as of mid-afternoon, suggesting investors expect the momentum to continue.
Foreign investors have bought a net $3.18 billion shares so far this month, and are now net buyers of $304.88 million worth Indian stocks for the year following heavy selling in January and February.
"Nifty rollover is quite strong, indicating that the market is looking for positive surprises going forward," said Sahaj Agrawal, deputy vice president of derivatives at Kotak Securities.
"Even rollover cost has risen as traders are looking at carrying forward long bets, which broadly indicates that market participants, largely foreign investors, are positive and upside trend is likely to continue."
The broader Nifty was up 0.38 percent at 7,764.52 as of 0846 GMT, while the benchmark BSE Sensex was 0.34 percent higher at 25,423.78.
Both the indices are set to post their best monthly gain since Jan. 2012.
Drug firm Natco Pharma rose 5 percent after its board approved the sale of non-core business 'Save Mart Pharmacy Stores' in the U.S.
Hindustan Zinc jumped as much as 12.4 percent after its board declared a special dividend of 24 rupees per share against market expectation of 19 rupees.
Gas distributors such as Gujarat Gas and Indraprastha Gas rose 3.4 percent and 2.2 percent, respectively, amid expectations April-Sept local gas prices would be cut by 20 pct to $3.06/mmbtu.
(Reporting by Aastha Agnihotri in Bengaluru; Editing by Biju Dwarakanath)
