BENGALURU, Feb 14 Reuters Indian shares rebounded in the final two hours of trade on Wednesday, led by a jump in public sector enterprises on the back of comfortable valuations while a drop in IT stocks after hot U.S. inflation data capped the gains.

The NSE Nifty 50 index rose 0.45 to 21,840.05, while the SP BSE Sensex settled 0.39 higher at 71,833.17.

Both the bluechip indexes had lost about 1 earlier in the session.

Domestic markets staged a recovery, buoyed by renewed buying interest in banking stocks, said Vinod Nair, head of research at Geojit Financial Services, adding that improving asset quality and government39;s focus on fiscal prudence made stateowned banks attractive.

Barring IT and pharma, sectors that earn a significant share of revenue from the U.S., all the other 11 major sectors advanced.

Public sector banks added 3.24, led by a 4.20 jump in India39;s top stateowned lender State Bank of India.

A comparison of public sector banks39; valuations with historical data suggests a rerating potential of 2530, said equity analysts led by Mahesh Nandurkar of Jefferies. They identified SBI, Coal India and NTPC as their top picks among stateowned companies.

Bharat Petroleum Corporation of India, ONGC and Coal India were among the top five Nifty 50 gainers.

The rise in BPCL, ONGC and Coal India also powered the energy index 2.24 higher.

On the other hand, IT and pharma shed about 1 each, after data showed inflation in the world39;s largest economy slowed…