Sensex up as banking stocks gain ahead of earnings

Indian shares were up on Wednesday as financial stocks gained on an upbeat start to the earnings season and ahead of quarterly results from major banks.

The Nifty Bank index hit its highest in two months, with HDFC Bank and ICICI Bank leading the gains.

"December quarter earnings as a whole have been mostly in-line or better than expected barring the IT sector," said Siddhartha Khemka, head of research equities at Centrum Wealth.

"Going forward, market maybe expecting things to be relatively better or at least expects no major negative surprises in numbers especially in relation to the larger financials who are index heavyweights," Khemka said.

The government's annual budget is due on Feb. 1 and investors hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes.

The broader NSE Nifty was up 0.6 percent at 8,444.55 as of 0545 GMT, while the benchmark BSE Sensex was 0.5 percent higher at 27,375.64.

The Nifty Bank index gained as much as 1.1 percent to hit its highest since Nov. 17, 2016. HDFC Bank and ICICI Bank gained nearly 1 percent.

Axis Bank and Yes Bank are scheduled to report earnings on Thursday.

Among the losers were Bharti Airtel, down 1.3 percent, and Reliance Industries Ltd which lost 0.3 percent.