(Reuters) - Indian shares rose more than 1.5 percent on Wednesday and came close to their highs for the year as data showing easing inflation and a government forecast for an above-average monsoon rains sparked hopes for the economy and for more rate cuts by the central bank.
Gains were also supported as surprisingly upbeat Chinese trade data offered hopes the Asian giant was finally stabilising, sending the MSCI's broadest index of Asia-Pacific shares outside Japan up 1.5 percent.
"Expectations are now building up with respect to future growth, which is somewhat positive compared to what it was two years ago," said Dhananjay Sinha, head of research at Emkay Global Financial Services.
The Nifty was up 1.63 percent at 7,834.14 as of 0631 GMT, after touching its highest level since Jan. 4 earlier in the session.
The Sensex was 1.66 percent higher at 25,562.71, after hitting its highest level since Jan. 6 earlier in the session.
Indian stock markets will remain closed on Thursday and Friday for public holidays.
Banks were among the leading gainers after data released late on Tuesday showed retail inflation eased in March to a six-month low while industrial output beat market expectations and grew at an annual rate of 2.0 percent in February.
Sentiment was also boosted after the weather office said on Tuesday monsoon rains were expected to be above average in 2016 after two consecutive years of drought.
State Bank of India and ICICI Bank rose 2 percent and 5 percent, respectively.
Agriculture-related stocks jumped for a second straight session on the monsoon forecast. Jain Irrigation Systems rose 1.5 percent, while Insecticides (India) Ltd soared 5 percent.
Hopes of revival in rural demand also boosted two-wheeler maker Hero MotoCorp and consumer goods firm Hindustan Unilever. Hero MotoCorp and Hindustan Unilever were up 0.6 percent and 1.7 percent, respectively.
Meanwhile, Wipro rose 2.3 percent after the software services exporter said it would consider a buyback of shares at a board meeting on April 20.
(Reporting by Aastha Agnihotri in Bengaluru; Editing by Subhranshu Sahu)
