The benchmark Sensex rose 0.8 per cent on Monday to test a fresh 2.5 year high,with financials leading the charge,supported by firm world equities. Financials marched ahead as investors placed bets on optimistic outlook for loan demand in the world's second-fastest growing major economy after China. Leading lender State Bank of India rose 1.1 per cent while top private sector lender ICICI Bank climbed 3 per cent. Mortgage lender Housing Development Finance Corp gained 1.5 per cent. State Bank of India plans to hit the market with a rights issue of about Rs 200 billion likely in the fiscal quarter ending March 2011,two sources with direct knowledge of the matter said. The 30-share BSE index closed 0.79 per cent or 143.51 points higher at 18,287.50,with 27 of its components closing in the green. It gained as much as 0.9 per cent to 18,309.25 points,its highest level since February 2008. "It (the rise) is all on the basis of hopes and expectations rather than actual events," said Arun Kejriwal,director of research firm KRIS. "Profit booking is likely as we are back at the higher levels." The benchmark index gained 4.7 per cent so far in 2010,driven by $11 billion of foreign fund flows into the local stock market. Foreign funds had poured in a record $17.5 billion in 2009,which had helped the benchmark index rally 81 per cent. For the year to date,it has outperformed MSCI's world equity index which has shed 0.9 per cent and emerging markets index which firmed 2.2 per cent. Advancing shares thrashed declining ones in the ratio of 1.9:1,in a relatively moderate volume to 440 million shares. The 50-share NSE index climbed 0.9 per cent to 5,486.15 points. Export-oriented software companies,which were dragged lower on a knee-jerk reaction to news that the U.S. Senate's vote to increase visa costs would hit margins,recouped early losses. "The increase in visa costs would not make a big impact on IT companies' margins. Their fundamentals remain strong," said Shashi Bhusan,senior research analyst at brokerage Prabhudas Lilladher. Top outsourcer Tata Consultancy climbed 1.4 per cent while peers Infosys and Wipro rose 0.3 per cent and 0.8 per cent respectively. Tata Motors to rise,on expectations the vehicle maker may post robust June-quarter results on Tuesday. It jumped nearly 3 per cent to Rs 920.80 intra-day,to test a fresh 3.5 year high. The vehicles maker is expected to swing to a net profit of Rs 9.8 billion for the June quarter from a loss of Rs 3.3 billion a year ago,a Reuters poll showed. Tata Motors closed 2.8 per cent higher at Rs 918.95 while top car maker Maruti Suzuki gained 0.9 per cent to Rs 1,232.45. Car sales in India rose an annual 38 per cent in July,as a near-normal monsoon held out prospects of good economic growth and a fall in food prices,boosting customer sentiment. Energy major Reliance Industries,which has the heaviest weight on the index,dropped for the fourth straight session on concerns over delay in ramp up of gas production and that new projects may take time to accrue benefits. The stock closed 0.7 per cent lower at Rs 993.65,its lowest close since May 25. MSCI's broader world equity index was up 0.3 per cent by 1025 GMT. The FTSEurofirst 300 index rose 1.3 per cent while more volatile emerging stocks index added 0.5 per cent. Growing speculation the U.S. Federal Reserve will have to buy bonds sooner rather than later,to bolster the sagging economy also lent support,ahead of the Fed's meeting on Tuesday.
