BSE Sensex rises 4th day; Reliance, SBI rally

A road sign stands next to the Bombay Stock Exchange building (R), in this August 2005 file photo. The BSE Sensex climbed 2.1 percent on Monday, extending a winning streak to a fourth consecutive session, with Reliance Industries leading the way after a newspaper said the energy giant was close to an overseas buy.

MUMBAI (Reuters) - The BSE Sensex climbed 2.1 percent on Monday, extending a winning streak to a fourth consecutive session, with Reliance Industries leading the way after a newspaper said the energy giant was close to an overseas buy.

Firmer global stocks after the Group of 20 pledged to keep stimulus in place until there was assured recovery, after data showed the U.S. unemployment rate rose to a 26-year high also helped sentiment.

Reliance, which has the most weight in the main index, rose 3.5 percent to 2,024.55 rupees after the Economic Times reported it was close to a nearly $6 billion overseas acquisition and the likely target was the assets of bankrupt petrochemicals firm LyondellBasell.

"It would be a good buy at a time when the world braces for recovery," said Prayesh Jain, a research analyst with India Infoline.

"Reliance has a huge cash pile and is comfortable with the leverage position. If this acquisition does happen, it will not really burden its balance sheet," he said.

The 30-share BSE index closed up 2.11 percent, or 340.44 points, at 16,498.72, its best close in two weeks. Twenty-five of its components advanced.

"There is a lot of speculative buying happening, with positive global cues supporting," said Ambareesh Baliga, vice-president of Karvy Stock Broking.

"But, the worry is the valuations are expensive. The correction we saw recently was warranted," he said.

State Bank of India rallied 5.2 percent to 2,318.55 rupees, after the top lender said it had entered into an agreement with T. Rowe Price to sell a 6.5 percent holding each in UTI Asset Management Company and UTI Trustee Company.

Private lender ICICI Bank firmed 4.7 percent and HDFC Bank rose 4.1 percent.

The benchmark index has risen 71 percent since the end of 2008, powered by foreign fund inflows of more than $14 billion.

On Sunday, the finance minister said the timing for winding down stimulus measures would be decided when it was apparent the economy is recovering, but there would be no more stimulus measures.

Prime Minister Manmohan Singh said on Sunday growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7 percent compared with a 6.5 percent forecast

for the 2009/10 fiscal year.

In the broader market, gainers outnumbered losers in the ratio of 2.7:1 on a relatively moderate volume of 361 million shares.

Telecom stocks fell as the sector outlook remained weak after disappointing quarterly results and a deepening price war, analysts said.

Bharti Airtel fell 3.9 percent to 307.50 rupees while rival Reliance Communications was down 2.2 percent at 174.10 rupees.

Bharti Chief Executive Manoj Kohli said industry-wide average revenue per user (ARPU) would continue to fall on rising competition, but the ongoing price war was only a short-term phenomenon.

On Sunday, Chairman Sunil Mittal said the company was not actively seeking acquisitions.

Cigarette to hotel business ITC raced 3.9 percent while personal care products maker Hindustan Unilever shed 0.7 percent, after Morgan Stanley added ITC to its focus list and removed Hindustan Unilever from the same.

Hozefa Topiwalla, analyst at Morgan Stanley, said ITC was in a strong position in one of the most attractive cigarette markets in the world and was demonstrating strong pricing power. He recently upgraded ITC to overweight from equal-weight.

The 50-share NSE index closed 2.1 percent higher at 4,898.40.

STOCKS THAT MOVED

* Mahindra Satyam jumped 10.7 percent, its biggest single-day gain in 3-½ months, to 114.45 rupees after the outsourcer's chief executive said on Sunday the worst was over and it had added 35 clients since mid-April, while it lost just a handful.

* Hindustan Construction Co rose 2.6 percent to 137.65 rupees after its chairman said the company expects its order book to rise by a quarter to about 200 billion rupees ($4.3 billion) for the year ending March 2010.

MAIN TOP 3 BY VOLUME

* Suzlon Energy on 15.6 million shares

* Mahindra Satyam on 15.5 million shares

* Unitech on 13.2 million shares

(Editing by Ranjit Gangadharan)

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