BSE Sensex snaps 2-day losing streak on fund inflows

Commuters walk past the Bombay Stock Exchange (BSE) building in Mumbai February 28, 2011. The BSE Sensex closed up nearly 2 percent in firm trade on Thursday, snapping a two-straight session fall, on a broad rally triggered across sectors by stable foreign fund inflows.

MUMBAI (Reuters) - The BSE Sensex closed up nearly 2 percent in firm trade on Thursday, snapping a two-straight session fall, on a broad rally triggered across sectors by stable foreign fund inflows.

Financials were among the top gainers, with State Bank of India (SBI) and ICICI Bank closing up 1.6 percent and 1.34 percent respectively.

Over the past six months, shares in SBI have fallen 12.6 percent while those of ICICI Bank have fallen 2.3 percent on worries over rising interest rates impacting loan growth.

Energy major Reliance Industries closed up 2.09 percent, after an oil ministry source said India's cabinet may consider approval for a $7.2 billion deal between the company and BP next week.

Concerns over Reliance's gas production have for months dampened its growth outlook and kept its shares under pressure, which have fallen 19.4 percent year-to-date.

"There is no specific reason for the market to rise. The market is rising after seeing two-three days of consolidation," said Neeraj Dewan, director at Quantum Securities.

"FII (foreign institutional investor) buying must also be happening with the kind of momentum you are seeing."

Foreign funds have bought Indian shares worth $2.2 billion over nine sessions to Tuesday, data from SEBI showed, pushing the main index higher.

The 30-share BSE Sensex closed up 1.88 percent at 19,078.30 points, with 29 of its components gaining ground.

The index has fallen 0.5 percent over the past two sessions and has shed 7.3 percent of its value year-to-date.

"The market will consolidate, correct a little bit and then keep on going up," Dewan added.

The software services sector also gained with bellwether Infosys, which flags off first-quarter earnings on Tuesday, closing up 1.42 percent.

Bigger rival Tata Consultancy Services ended up 1.11 percent, while No. 3 software services firm Wipro closed up 1.46 percent.

"We expect good June-quarter results and commentary from large caps with TCS continuing to lead," brokerage J.P. Morgan said in a research report this week.

"IT (information technology) spend, particularly discretionary spending, outlook is likely to remain strong despite macro concerns and weakness in consumer spending," the brokerage added.

India's biggest and only listed microlender, SKS Microfinance, rose as much as 20 percent to 411.80 rupees after the finance ministry issued a draft of regulation proposed for the sector.

The 50-share NSE index was up 1.84 percent at 5,728.95 points.

A total of 988 gainers led 421 losers in a volume of 593 million on the NSE, higher than the 90-day daily average volume of 529 million shares.

The MSCI world equity index was up 0.09 percent at 1044 GMT, while the Thomson Reuters global stock index rose 0.06 percent.

STOCKS THAT MOVED

* Larsen and Toubro Ltd rose 3.15 percent to 1,863.45 rupees after the company said its unit had raised $75 million in a pre-IPO share sale.

* Entertainment Network and Reliance Broadcast Network rose 5.36 percent and 7.34 percent respectively after the cabinet raised foreign direct investment limit in the FM radio sector and gave the green light to more radio spectrum auction.

* Elder Healthcare rose 19.97 percent to 141.20 rupees after CNBC-TV18 television channel reported the company was planning to launch a range of new products in the skincare and other segments.

TOP 3 MAIN STOCKS BY VOLUME ON NSE

* Rushil Decor on 49.6 million shares

* Delta Corp on 19.4 million shares

* Unitech on 17.2 million shares

(Editing by Malini Menon)