(Updates for markets close) By Bharath Rajeswaran Sept 16 (Reuters) - Indian shares rose on Tuesday, led by gains in auto stocks on signs of demand recovery and buoyed by optimism over progress in trade negotiations with the U.S. ahead of the Federal Reserve's rate decision. The Nifty 50 <.NSEI> added 0.68% to 25,239.1, the highest close since July 10, and the BSE Sensex <.BSESN> rose 0.73% to 82,380.69, the highest close since July 23. The auto index <.NIFTYAUTO> gained 1.4%, led by Mahindra & Mahindra's 2.2% rise. The sub-index snapped a five-session losing streak. Nomura analysts flagged early signs of demand recovery in the sector following cuts to the Goods and Services Tax (GST), naming Mahindra & Mahindra , Hyundai Motor India , TVS Motors , and Ashok Leyland as their top picks. Energy stocks <.NIFTYENR> rose 0.9%, gaining for a fifth straight session. HSBC noted that government support for oil marketing companies and steady fuel demand could drive earnings. The Nifty FMCG index <.NIFTYFMCG> was the only sub-index to decline, edging 0.27% down. The broader small-caps <.NIFSMCP100> and mid-caps <.NIFMDCP100> added about about 1% and 0.5%, respectively. Other Asian markets also rose, as investors positioned for an expected U.S. rate cut on Wednesday that could spur foreign flows into emerging markets such as India. Optimism following India and the U.S. resuming negotiations, weeks after Washington imposed punitive tariffs on New Delhi's purchase of Russian oil, also supported sentiment, said Kranthi Bathini, director of equity strategy at Wealthmills Securities. "Expectations of a U.S. Federal Reserve rate cut have also reinforced the positive global backdrop," said Bathini. NTPC Green Energy jumped 1.7% after its joint venture commissioned a 100 MW project. Cyient gained 4.1% after its subsidiary Cyient Semiconductors announced a partnership with semiconductor test and validation services provider Anora. Steelmakers Jindal Saw and Maharashtra Seamless fell 0.7% and 1.3%, respectively, after Reuters reported that India's antitrust inspectors conducted surprise raids in an alleged case of bid rigging. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ India's Nifty 50 closes at a more than two-month high level https://reut.rs/47GYnAV ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy and Janane Venkatraman) ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;)) Keywords: INDIA STOCKS/
