NEW DELHI The BSE Sensex rose for a sixth straight session on Friday to a 11-week high as foreign investors continued to buy local stocks on indication of a policy shift towards reviving growth, with an increase in global risk appetite also aiding sentiment.
Foreign funds have pumped in more than $1.5 billion into beaten-down Indian shares this month, in sharp contrast to net outflows of about $500 million in 2011.
Energy giant Reliance Industries (RELI.NS) and software exporter Infosys (INFY.NS), which together contribute about a fifth to the benchmark index, led the rise. Reliance rose 3.7 percent, while Infosys jumped 2.2 percent.
The main 30-share BSE index closed 0.92 points up at 17,233.98, its highest closing level since November 9, with 16 of its components gaining.
"I think it's because of loads and loads of liquidity and above that the Fed statement that probably they will keep interest rates low till late 2014," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors.
"I think it's value taking plus liquidity support."
On Wednesday, the Federal Reserve surprised financial markets by saying it expected to leave U.S. benchmark borrowing costs at effectively zero until at least late 2014, considerably later than some investors had expected.
Indian markets were closed on Thursday for a local holiday.
Britain's top shares were lower on Friday morning, baulking after testing the 5,800 level in the previous session, as talks between Greece and its private creditors fell under the spotlight.
State-run Steel Authority of India Ltd (SAIL.NS) rose almost 7 percent after the country's largest domestic steelmaker said it will spend about 145 billion rupees on capital expenditure in the next fiscal year, adding 5 million tonnes of capacity.
Tata Steel (TISC.NS) added 3.1 percent after the world's seventh-largest steelmaker said it would cut 200 jobs at four European plants as part of a restructuring of its European steel tubes business in the face of tough economic conditions and weakening demand.
The benchmark has added about 11 percent so far this year. It had shed nearly a quarter last year, making it one of the worst performers in the world.
"This is tomfoolery. We were the worst performing market last year and the best performing market this year. What has changed? Nothing," said Arun Kejriwal, a strategist at Research firm KRIS.
He said foreign institutional investments, an improved rupee and ground-level pessimism of last year have driven the stocks up this month.
Banks, which have rallied recently, however, bucked the trend after earnings from most state-run lenders failed to lift investor sentiments with higher provisions and weaker asset quality. The sector index, which has the biggest sectoral weightage on the index, fell 0.37 percent.
Top lender State Bank of India fell 0.85 percent, while smaller rival HDFC Bank (HDBK.NS) lost 1.2 percent.
The 50-share NSE index rose 0.90 percent to 5,204.70 points. There were about 1.8 gainers for every loser in the broader market. About 836.6 million shares changed hands.
"We believe it is still early to look for India-specific drivers. Current market moves correlate well with those seen globally," Credit Suisse said in a research note on Thursday.
"If the market is to see a sustained uptrend, we need to see earnings upgrades," the brokerage said in the note.
At 1035 GMT, the FTSEurofirst 300 index of top European shares was almost flat. World stocks, as measured by the MSCI world equity index, rose 0.02 percent.
STOCKS THAT MOVED
* Iron ore exporter Sesa Goa Ltd SESA.NS rose 7 percent after the company posted a better-than-expected operational performance for the quarter ended December 31 on inventory liquidation at Karnataka and Goa.
* IL&FS Transportation Networks Ltd (ILFT.NS) rose 3.7 percent on news that the infrastructure builder has emerged as the lowest bidder for a road project in the northern state of Himachal Pradesh.
* Shares of Indian generic drugmaker Ranbaxy Laboratories (RANB.NS) fell 6.5 percent after the company agreed to make broad changes at its plants in India and United States as part of a long-running U.S. government probe.
MAIN TOP THREE BY VOLUME
* Suzlon (SUZL.NS) on 42.6 million shares
* GVK Power (GVKP.NS) on 34.8 million shares
* Tata Motors (TAMO.NS) on 26.1 million shares
(Editing by Malini Menon)