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Indian shares advanced on Monday, helped by strong earnings from Tata Motors Ltd and as the first drop in the country's wholesale price index in nearly three years added to the optimism over cooling retail inflation.

The Nifty 50 closed 0.46% higher at 18,398.85, while the S&P BSE Sensex rose 0.51% to 62,345.71.

Twelve of the 13 major sectoral indexes advanced, with auto and realty stocks rising 0.7% and 4.32%, respectively.

Tata Motors gained 2.89%, powering the rise in the auto index, after posting record revenue and setting its first dividend in 7 years.

DLF rose 7.39% to a 52-week high and boost realty stocks after reporting a surge in fourth-quarter profit.

On the economic front, India's annual wholesale price index (WPI) fell 0.92% in April, from the same month a year earlier, having risen 1.34% in March and compared with economists' expectations of a fall of 0.20%.

That came after data on Friday showed retail inflation eased to an 18-month low in April. Economists now expect the central bank to pause" its interest rate hikes.

"India's macroeconomic performance is showing further signs of improvement, and this is providing a major fillip to the markets, said Shrikant Chouhan, head of equity research (retail) at Kotak Securities.

"Positive Asian and European market cues coupled with a further drop in (India's) wholesale inflation numbers fuelled a major rally."

World stocks rose on cautious optimism ahead of this week's deliberations over the U.S. $31.4 trillion debt ceiling, a raft of economic data due and a bevvy of central bankers lined up to hint about whether further rate hikes await. [MKTS/GLOB]

Among stocks, Nifty 50-member Cipla Ltd lost nearly 2% after the drug maker reported a smaller-than-expected profit.

Meanwhile Avenue Supermarts Ltd, which operates the DMart chain of retail stores, fell over 4% after its quarterly profit margin contracted.