Indian shares edged up at the close of trade on Thursday after retreating from record highs earlier in the day, with auto stocks boosted by expectations interest rates will fall after an official forecast of a better monsoon eased inflation fears. The broader NSE index closed up 0.16 percent at 9,422.40, while the benchmark BSE index ended marginally higher at 30,250.98.

The NSE Auto index rose 1.04 percent, led by gains in Eicher Motors, which closed up 5.7 percent. Strong regional markets, tracking a record high close on MSCI's global stocks benchmark following strong gains in oil prices, also helped sentiment. The NSE Auto index gained 1.02 percent, led by gains in Eicher Motors, up as much as 3.84 percent at 28940 rupees, its highest ever.

Earlier in the week, the head of the country's weather office, forecast a higher monsoon rainfall as concerns over the El Nino weather condition eased, raising prospects of higher farm and economic growth. A better-than-expected monsoon could also keep inflation in check, reducing the prospects of a tighter interest rate regime. "The main reason for yesterday's and today's rally on the indexes is the positive monsoon rainfall forecast," said Siddharth Sedani, head and vice president, equity advisory at Anand Rathi. The monsoon delivers about 70 percent of India's annual rainfall and is a critical factor as nearly half of the country's farmland lacks irrigation.

Copyright Reuters, 2017