Updated from 5:52 p.m. EDT
Indian stocks hit an eight-week high Tuesday after investors in the Far East cheered the Reserve Bank of India's (RBI) decision to leave interest rates unchanged in its annual credit policy meeting. The RBI, however, asked the nation's lenders to increase reserves to help cool inflation.
The Bombay Stock Exchange's benchmark 30-stock Sensex Index rose 363 points, or 2.1%, to 17,379.
India's Finance Minster Palaniappan Chidambaram said he would extend the tax holiday for software companies by one year to March 2010 under the Software Technology Parks of India (STPI) plan. Had the original expiration date stayed in effect, top Indian technology companies could have seen a drop in earnings as their tax rates would have risen to a range of 18% to 22% from 12% to 15%."This is obviously good news for the industry, especially at a time when they are facing problems because of the weakness in the U.S. economy," said Tejas Doshi, head of research at Sushil Finance in Mumbai. American depositary shares and receipts of Indian information technology companies rallied on the news, with Satyam Computer (SAY) adding 5.6% to $25.37; WNS (WNS) trading up 4.8% to $18.39; Infosys Technologies (INFY) advancing 3.8% to $43.90; Cognizant Technology Solutions (CTSH) jumping 2.9% to $32.12; and Patni Computer Systems finishing up 2.5% to $13.11. Elsewhere in the Indian IT sector, Wipro (WIT) announced it has formed a strategic worldwide partnership with eService software provider Transversal. The agreements will combine the strengths and expertise of both companies to address customer needs and deliver online solutions for the financial service sector. Shares of Wipro rose 1.8% to $12.93.