Sensex rallies as U.S. nuclear deal brightens

By Devidutta Tripathy

NEW DELHI (Reuters) – The BSE Sensex rose 3.2 percent on Monday to their highest close in nearly a week, boosted by a nuclear trade ban waiver that raised hopes for large investment in the energy-hungry nation.

Sentiment was also bolstered after the United States moved to take control of top mortgage firms Fannie Mae and Freddie Mac, triggering a global stocks rally with the European stocks rising about 4 percent and MSCI All-Country World index up nearly 2 percent.

Traders said the day's trend was set by the 45-member Nuclear Suppliers Group (NSG) nations decision on Saturday to give a one-off waiver allowing them to do business with India.

Shares in power producer NTPC Ltd and infrastructure play Larsen & Toubro rose 4.6 percent each on hopes the firms would be able to clinch nuclear energy deals, while power equipment maker Bharat Heavy Electricals gained 3.4 percent.

"Today's move is more because of the NSG approval than the global factors. There are hopes that this will translate into lots of foreign direct investment in the sector and boost the economy," said Jigar Shah at Kim Eng Securities India.

India produces just 3 percent of its energy from nuclear power and JPMorgan estimates a successful Indo-U.S. nuclear deal could translate into orders of about $10 billion in the next five years as firms set up new capacity and upgrade the existing.

Industry lobby group Confederation of Indian Industry said it expected about $27 billion investment in nuclear power in the next 15 years.

The 30-share main BSE index rose 3.18 percent, or 461.14 points, to 14,944.97, its best close since Sept. 2, with all the components gaining.