BSE Sensex rises 1 pct; banks, Sterlite up

MUMBAI (Reuters) - The BSE Sensex rose more than 1 percent on Monday morning to its highest in more than three weeks, led by gains in banks and supported by strength in Asian markets.

Leading banks State Bank of India and ICICI Bank rose, helped by a view that economic conditions were improving and the long-term outlook for the sector was positive.

"At present, we believe that the operating environment for banks is positive, with sufficient liquidity and low interest rates," First Global Securities said in a note of Friday.

"Going forward, there will be a pick-up in credit growth, as companies, particularly in the Infrastructure segment, are coming back to banks for their working capital requirements and project finance," it said.

State Bank rose 2.8 percent to 2,362 rupees while ICICI climbed 1.6 percent to 923.75 rupees.

At 11:08 a.m. (0538 GMT), the 30-share BSE Index was trading up 1 percent at 17,017.64, with 26 components gaining.

The benchmark rose above 17,000 for the first time since Oct. 23, and has gained more than 7 percent this month.

"The market has risen in line with global markets. But, we are still cautious as it seems to be purely a liquidity-driven rally," said Ambareesh Baliga, vice-president of Karvy Stock Broking.

The benchmark index is up more than three-quarters in 2009, boosted by net foreign fund buying of nearly $15 billion of stocks.