BSE Sensex rises 1.7 pct; budget awaited

By Prashant Mehra

MUMBAI (Reuters) - The BSE Sensex shrugged off an early fall and rose 1.7 percent on Friday, as investors covered their short positions ahead of an updated budget on Monday and helped the market to post its second consecutive weekly gain.

Rail freight and passenger fares were kept unchanged in a separate budget for the railways presented to parliament on Friday, and the main budget is widely expected to detail plans to further open up the economy and kick off asset sales.

Financial stocks, led by mortgage lender Housing Development Finance Corp, rose on hopes for incentives, while infrastructure-related stocks gained in anticipation of higher government spending.

Top engineer Larsen & Toubro, state-run utility NTPC and Bharat Heavy Electricals, all rose between 1.5 to 3 percent.

The 30-share BSE index rose 1.74 percent, or 254.56 points, to 14,913.05 points, with 23 components gaining. The index had slipped as much as 1.1 percent at one point, in volatile trade.

It gained 1 percent on the week, its 16th weekly rise in 17 and has risen more than half this year on hopes for an economic recovery and expectations for a investor-friendly budget.

The market may have run too fast and could be in for disappointment if the budget falls short of expectations, analysts said.

There are doubts on how much the cash-strapped government can do to provide an economic stimulus to lift growth, traders said.