Shares of Indian companies trading on U.S. exchanges rose Wednesday after the Asian nation's central bank confirmed it boosted key interest rates in a defensive move against inflation.
The Bank of New York India ADR Index rose 21.84 points, or 2.4 percent, to 909.47 in the afternoon session. ADR stands for American Depositary Receipt, which is a security designed to allow U.S. investors to trade shares of companies based overseas.
The Reserve Bank of India confirmed it raised the repurchase rate, the rate at which it makes short-term loans to commercial banks, on Tuesday to 8.5 percent from 8 percent.
The bank increased the cash reserve ratio, or the share of deposits banks must keep with the central bank, to 8.75 percent from 8.25 percent. The cash reserve ratio would be increased in two stages starting next month.
"We believe uncertainty about further monetary policy tightening is likely to remain as an overhang to market expectations, but given the aggressive pace of tightening done so far, we expect the Reserve Bank of India to watch inflationary trends before taking further action," Goldman Sachs analyst Sampath S.K. Kumar said in a note to clients.
Indian ADRs jumped after the news, with shares of ICICI Bank Ltd. among the biggest gainers, up $1.47, or 4.6 percent, to $33.32.
Shares of Tata Communications Ltd. increased 88 cents, or 5.2 percent, to $17.85; shares of Sify Technologies Ltd. rose 13 cents, or 3.5 percent, to $3.90; and shares of Rediff.com India Ltd. added 27 cents, or 4.1 percent, to $6.86.
Bucking the trend, shares of Patni Computer Systems Ltd. slipped 4 cents to $11.16.
The Bank of New York Emerging Markets ADR Index _ which includes shares of companies based in China, Mexico, Brazil and more _ rose 6.33 points to 353.72.
The Bank of New York Composite ADR Index gained 1.90 points to 170.16 as the U.S. markets rose in afternoon trading.
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