BSE Sensex up 0.9 pct; Reliance gains 3.3 pct

By Ami Shah

MUMBAI (Reuters) - The BSE Sensex rose 0.9 percent on Monday, powered by Reliance Industries after the energy major's offer to buy a controlling interest in U.S.-based bankrupt petrochemicals company LyondellBasell.

Investors cheered the bid, which comes when global asset prices are cheap after the financial crisis. A deal would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia's SABIC, Germany's BASF and U.S.-based Dow Chemical Co.

Sources have put the value of the cash offer at around $10 billion to $12 billion, which would make it India's second-biggest ever foreign takeover. In 2007, Tata Steel bought Corus for $13 billion.

"In deals like Tata-Corus, the valuations were phenomenally high. But when a company is down and out, it is going to be cheap," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services, who has bought the stock for his clients.

Reliance, which has the heaviest weight in the main index, climbed 3.3 percent to 2,195.50 rupees, its highest close in more than five weeks.

Vaibhav Sanghavi, director of Ambit Capital, said Reliance's comfortable balance sheet and synergies also helped the stock.

The 30-share BSE index firmed 0.93 percent, or 158.33 points, at 17,180.18, its best close in more than a month.

Two-thirds of its components ended up, while in the broader section gainers led losers in the ratio of 1.3:1 on relatively lower volume of 348 million shares.