Shares in discounted India Capital Growth (IGC ) were lifted after the investment trust announced a £5m share buyback.

The £142m fund was trading up 3.6% at 152p per share after it confirmed plans to purchase ordinary shares for 1p each up to a maximum £5m.

Trust broker Shore Capital will make the trading decisions on the timing of the purchases which will start on Tuesday and last until 29 December unless the trust decides to terminate the scheme earlier.

IGC warned that share purchases ‘could represent a significant proportion of the daily trading volume in the shares’ and could ‘exceed 25% of the average daily trading volume’.

ICG is the top performing Indian trust, of which there are four, over one, three, five and 10 years, but it still trades on a 13.8% discount. Over the past year, the net asset value (NAV) has risen 21.4%, more than double the sector’s average 9.5% return, according to Numis. Over three years the portfolio is up nearly 100% against an average 72% rise in the sector.

 Indian equities manager Gaurav Narain is confident the strong performance can continue thanks, in part, to recent technology deals announced between India and the US that has paved the way for a new era of growth.

The development of e-commerce infrastructure under prime minister Narendra Modi is also having a positive impact on the portfolio. Gaurav said he is playing into this theme through banks, which have been the fund’s top performers.

Financials make up just under a quarter of the fund and include its largest holdings, IDFC Bank, Federal Bank, and Indusind Bank.

While Indian valuations are above their historic average at 18x, Gaurav said this reflects the optimistic outlook and the fact India is better shielded against a global slowdown than other emerging markets.