BSE Sensex rises 1.4 pct; up for 3rd week in row

Workers pull a hand-cart in front of the Bombay Stock Exchange (BSE) buildi...

The BSE Sensex climbed 1.4 percent on Friday and helped stretch weekly run of gains to three in a row, after higher European markets lifted investor confidence from an early slide.

Banks led the gainers with sentiment also boosted by an assurance the government was not planning to tax foreign capital inflows.

Montek Singh Ahluwalia, deputy chairman of the Planning Commission and a close confidant of the prime minister, told Reuters the government wants an increase in foreign investment and there was no proposal to tax overseas funds.

Curbs on foreign inflows imposed by Brazil and Indonesia have raised worries other countries may tighten rules to stem their strengthening currencies as investors move money into faster growing economies.

The 30-share BSE index closed up 1.41 percent, or 236.20 points, at 17,021.85, taking gains for the week to 1 percent. Twenty-six components closed in the green.

The benchmark is up more than 76 percent this year, supported by foreign portfolio investment of $15.4 billion. In 2008, the index had fallen more than a half as foreigners pulled out over $13 billion.

"If the rally gains momentum and crosses 18,000-18,500, we will move from a stretched valuation scene to a bubble zone," said A.V. Srikanth, executive director of private wealth management at Anand Rathi Financial Services.

State Bank of India and ICICI Bank, the country's top two lenders, gained 2.4 percent and 1.3 percent respectively.

"Banking sector is looking good, as with the economy growing the sector has good potential," said R. Ganesh, director of Systematix Shares.

Energy giant Reliance Industries rebounded 2.1 percent to 2,125.15 rupees, after falling more than 3 percent over three days on the absence no major announcement at its annual general meeting earlier this week.

Outsourcers climbed on improving outlook in their main markets in the United States and Europe. Infosys Technologies jumped to a record high of 2,447 rupees, before settling at 2,427.50, up 0.75 percent.

Sector leader Tata Consultancy gained 2 percent and smaller rival Wipro firmed 0.7 percent.

Top vehicle maker Tata Motors closed 1 percent higher at 642.20 rupees, after CLSA upgraded the stock to 'outperfomer' from 'sell' on Thursday.

"We now recognise that JLR's demand environment is better than we expected and, combined with cost-cutting measures, should support a strong profit rebound over FY11-12," CLSA said in a note, referring to Tata Motors' Jaguar Land Rover brands.

Bharti Airtel dropped 1.4 percent to 288.75 rupees, after the leading mobile operator said it had launched a new bill plan that would slash mobile roaming rates by nearly 60 percent.

In the broader market, gainers outpaced losers in the ratio of 1.2:1 on moderate volume of 411 million shares.

The 50-share NSE index closed 1.3 percent higher at 5,042.45.

STOCKS THAT MOVED

* Thermax rose 3.6 percent to 598.15 rupees. The engineering firm said it had received an order worth 4.77 billion rupees to set up a captive power plant for a ferro alloy unit in Orissa.

* NDTV Ltd rallied 7.5 percent to 144.05 rupees after U.S. media firm Scripps Networks Interactive Inc said it would buy a majority stake in the broadcaster's lifestyle unit for $55 million.

MAIN TOP 3 BY VOLUME

* Suzlon Energy on 28.2 million shares

* Unitech on 13 million shares

* Dena Bank on 9.5 million shares

(Editing by Ranjit Gangadharan)

(For more news on Reuters Money visit http://www.reutersmoney.in)

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