Indian stocks entered the second half of the year with gains of more than 1%, as investors bought into beaten-down financial shares, with sentiment supported by data that showed manufacturing activity contracted at a slower pace in June.
Stocks of lenders were the biggest boost to the index, with the Nifty Bank Index, which has tumbled more than 30% so far this year, closing up 2.8% at a one-week high.
A private survey showed that India's manufacturing activity contracted for a third straight month in June, but at a much shallower pace, suggesting the worst may be over for the pandemic-hit economy, at least for now.
Coronavirus cases in India, however, continued to rise rapidly, jumping by more than 18,000 to 585,493 as of Wednesday morning, including 17,400 deaths, according to federal health ministry data.
Prime Minister Narendra Modi on Tuesday warned citizens against flouting rules to prevent the spread of the virus, as he extended a scheme providing free food grains to 800 million Indians at a cost of around $12 billion.
The stock market has recovered sharply from multi-year lows hit in mid-March on virus fears, but the benchmark indexes are still down around 14% for the year, having already suffered earlier in the year from a weak economy.
Broader Asian stocks struggled for traction as better-than-expected Chinese factory activity could not soothe worries that a surge in coronavirus cases in the United States could hinder an economic recovery.