Indian shares climbed more than 1 percent on Friday, after Moody`s Investors Service upgraded India`s sovereign bond rating, the first time in nearly 14 years, moving it to the second lowest level of investment grade.

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Moody`s lifted the country`s rating to `Baa2` from `Baa3`, while also changing its rating outlook to `stable` from `positive`. The ratings upgrade comes just weeks after the World Bank moved India up 30 places in its annual ease of doing business rankings.

The broader NSE Nifty was up 1.09 percent at 10,326.20 as of 0531 GMT, while the benchmark BSE Sensex gained 1.12 percent to 33,476.64.

"The long overdue sovereign rating upgrade for India is an endorsement of institutional and structural transformations ushered in by the government in the last few years while maintaining fiscal prudence," Rana Kapoor, Managing Director and Chief Executive of Yes Bank said in an email.

"Such global ratifications will lower the cost of borrowing and boost investor confidence and conviction in the economy."

The benchmark 10-year bond yield dropped as much as 12 basis points, while the rupee rose to as high as 64.60 against the dollar from its close of 65.3250 on Thursday.

"Moody`s rating upgrade is certainly positive for the markets and the rupee. In terms of bonds, market borrowing will remain a concern, along with crude oil prices and the U.S. rate hike worries," said Sunil Sharma, Chief Investment Officer of Sanctum Wealth Management.

"I think it is up to the government now to respond with a fiscal plan that makes sense."

Financials accounted for more than half the gains on the NSE index, with the Nifty finance index climbing 2 percent and the Nifty PSU Bank index up 2.4 percent.

Housing Development Finance Corp Ltd rose 2.9 percent, while Yes Bank Ltd was up 3 percent.

IT stocks, however, fell as the rupee firmed, with the Nifty IT index down 0.9 percent.

Infosys Ltd fell 1.7 percent, while Tata Consultancy Services Ltd slipped 0.8 percent.

A stronger rupee hurts returns from the U.S. market, the biggest source of revenue for Indian IT companies.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)