Financials power India's Nifty, Sensex to record closing highs

By Bharath Rajeswaran and Dimpal Gulwani

BENGALURU (Reuters) -India's blue-chip indexes notched all-time closing highs on Thursday, powered by gains in financial stocks, as the central bank's record dividend to the government kindled hopes of a reduction in the country's fiscal deficit.

The blue-chip NSE Nifty 50 gained 1.64% to close at a record 22,967.65. The S&P BSE Sensex also settled 1.61% higher at 75,418.04, an all-time high closing level.

Both the benchmarks posted their best day since March 1 when faster-than-expected economic growth data drove markets to a record high.

The blue-chips also gained for the sixth straight session, their longest winning streak since early December.

The Reserve Bank of India approved a record surplus transfer of 2.11 trillion rupees ($25.35 billion) to the government for fiscal year 2024, well above the government's projection.

Infusion of funds is akin to an indirect rate cut for the economy and can broadly have a positive impact across the financial markets, said Santosh Meena, research head at Swastika Investmart.

Financials, the heaviest-weighted sector in the Nifty 50 index, ended 1.9% higher.

Banks, state-owned lenders and private banks added between 1.7% and 2.1%.

"Market sentiment, particularly in the banking sector, improved substantially following the RBI's record dividend payout to government," said Vishnu Kant Upadhyay, assistant vice president of research and advisory at Master Capital Services.

"The dividend payout is expected to help the government reduce its fiscal deficit and increase capital expenditure," Upadhyay added.

Top Nifty 50 gainer Adani Enterprises climbed 7.84% on possible inclusion to Sensex in the semi-annual rejig of BSE indexes on Friday, Economic Times reported citing IIFL Alternative Research.

Adani Ports jumped 4.73% and was the second biggest gainer on the index.

Sun Pharmaceutical Industries shed 2.87%, and was the top Nifty 50 loser, after the drug maker missed March-quarter revenue estimates. Sun Pharma dragged pharma index down 0.52%, the only loser among 13 major sectors.

($1 = 83.2200 Indian rupees)

(Reporting by Bharath Rajeswaran and Dimpal Gulwani in Bengaluru; Editing by Mrigank Dhaniwala, Janane Venkatraman and Eileen Soreng)