Sensex adds 0.6 pct, stimulus awaited

Financials such as top lender State Bank of India gained 1.1 per cent to 1,330 rupees, while rival ICICI Bank climbed 1.5 per cent to 471.20 rupees on hopes a rate cut would boost demand for loans.

The banking sector index rose 1.6 per cent.

However, worries about falling earnings growth at companies remained a concern and there were doubts about how much government support could salvage the market from the global slowdown.

8220;The package will be nothing more than a steroid for the short term as world over these boosters have not been able to hold up the markets for long,8221; said Daljit Kohli, head of research at Emkay Global Financial.

The main 30-share BSE index firmed 0.55 per cent, or 54.76 points, to 9,958.22, its highest close since Dec. 19.

It opened up 0.9 and then fell 0.4 per cent during trade before rebounding as much as 1.7 per cent.

Eighteen of its components gained.

The benchmark climbed 6.7 per cent on the week, its third rise in the last four weeks.

8220;Investors should not make fresh commitments at these levels,8221; Kohli said. 8220;I am expecting a major dip before the market stages a sustainable recovery.8221;

Authorities had cut policy rates, announced 4 billion in extra spending and rolled out a four-per centage point cut in factory gate duties in December, but these failed to lift the market.

The BSE index fell 52.4 per cent in 2008, its worst performance ever, as the global financial crisis and a spending squeeze at home took their toll.

Brokerage India Infoline said in a report an economic stimulus package and the central bank8217;s 8220;pump-priming efforts8221; might provide a temporary filip to the markets, but there were doubts about sustainability of any rally.

Expectations for monetary easing rose after data on Thursday showed inflation fell to a near 10-month low in the third week of December, while exports dipped again.

8220;The expectations are too much in the market about the fiscal policy and if those expectations are not met then we can see a serious fall in the market,8221; said Neeraj Dewan, director at Quantum Securities.

In the broader market, two stocks rose for every one that fell on heavy volume of 457 million shares.

8220;The conviction in the market is still very low and I believe there will be strong resistance at these levels,8221; Dewan said. 8220;One has to be very cautious in the near term because we may see some shocks in the corporate earnings.8221;

Software bellwether Infosys Technologies, which kicks off the earnings parade on Jan. 13, fell 1.4 per cent to 1,130.95 rupees. Outsourcers get most of their revenue from the United States where a recession has hit demand.

Shares in energy group Reliance Industries rose 2.4 per cent to 1,283.90 rupees as investors saw value in the stock that had fallen 57.3 per cent in 2008, traders said.

After the mauling last year when foreign funds pulled out 13.3 billion, the outlook for 2009 is tempered.

8220;We have seen the worst kind of volatility last year, which we may not see in 2009,8221; said K.K. Mital, head of portfolio management services at Globe Capital, adding the near-term sentiment will be directed by the quarterly corporate earnings.

Shares in developers and mortgage companies climbed as traders bet on incentives for the crumbling real estate sector in the government8217;s economic stimulus package.

Top listed realty DLF rose 3 per cent to 300.60 rupees, Unitech ended 4.3 per cent higher at 46.40 rupees, while top mortgage lender Housing Development Finance Corp climbed 2.7 per cent to 1,544.95 rupees.

The broader 50-share NSE index closed up 0.44 per cent at 3,046.75.