Sensex closes 2.1 pc up as tech gains

Mumbai: The BSE Sensex closed 2.1 per cent higher on Tuesday propelled by export-driven software services firms that jumped 2 to 4 per cent on higher dollar revenue prospects as the rupee fell to a two-year low, while a short-covering rally in European shares also aided.

India's flagship $ 76 billion software services industry gets about half its revenues from the United States, the largest market for technology firms.

The main 30-share BSE index ended up 353.93 points at 17,099.28, with 28 of its components closing in the green. The Sensex, which fell on Monday, logged its third straight weekly gain last week, snapping a five-week-long losing streak.

India's software services sector leader Tata Consultancy Services (TCS) rose 3.9 per cent, No. 2 Infosys added 3.1 per cent, while smaller rival Wipro jumped 2.9 per cent.

"The weakness in the rupee has helped the markets today, but the outlook will depend on the news flow from the global markets such as the FOMC meeting and the Greece deadline," said Neeraj Dewan, director at Quantum Securities.

The market will watch out for cues from a two-day meeting of the US Federal Reserve that ends on Wednesday, analysts said.

European shares rose on Tuesday in a short-covering rally following the previous session's sharp losses, but traders said that the gains could be short-lived after a surprise downgrade of Italy's credit rating by Standard & Poor's, which showed that euro zone debt issues had not gone away.

The rupee pulled back from the two-year low touched earlier on Tuesday, comforted by gains in local equities and a rebound in the euro.

Global markets have been haunted since late July by the twin concerns of euro zone debt troubles and faltering US growth.

Index heavyweight Reliance Industries gained 3.68 per cent, shrugging off a report in the Mint newspaper which said India's federal investigative agency is considering filing a case against it over alleged favoured treatment for its operations of gas blocks in the KG basin.

Tata Motors rose as much as 3.2 per cent, after its luxury car unit Jaguar Land Rover said it will invest 355 million pounds ($ 561 million) on a new engine plant in central England.

Mahindra & Mahindra rose as much as 2.45 per cent after Ssangyong Motor Co, in which Mahindra is a majority shareholder, said it aims to expand vehicle sales volume and revenue by a third in 2013.

Lenders, which have been battered in the past two months with the BSE banking index plunging 13 per cent, also rose with top private lender ICICI Bank gaining 2.66 per cent to 882.35 rupees while top state-run lender State Bank of India (SBI) added 3.85 per cent to Rs 1,990.7.

"Banking stocks have recovered after being beaten down significantly. There is a feeling the worst in terms of the interest rate cycle is behind us," Quantum's Dewan said.

India's central bank raised key lending rate for the 12th time in 18 months last Friday and reiterated its vow to fight near double-digit inflation even as growth slows in Asia's third-largest economy.

Foreign funds have purchased $ 338 million worth of Indian shares this month until Friday, after having sold $ 2.2 billion in August.

The 50-share NSE index closed up 2.15 per cent at 5,140.2 points. In the broader market, there were 2.3 gainers for every losing stock with 537.4 million shares changing hands.

At 1030 GMT, MSCI's index of Asia-Pacific shares outside of Japan traded 0.28 per cent up, while Japan's Nikkei ended down 1.61 per cent.

Stocks that moved

* Everonn Education, a learning solutions provider closed 5 per cent higher at Rs 367.2 after its board for approved a 2.62-million share preferential share issue for 1.38 billion rupees ($ 28.7 million) to Varkey Group Ltd, making the latter a co-founder and triggering an open offer.

* Cairn India rose 4.97 per cent to Rs 305.4 after Goldman Sachs upgraded it to "buy" from "neutral" and revised its net asset value-based target price to 360 rupees from Rs 405.

* Subex Ltd, a provider of telecoms software products, jumped 3.8 per cent at Rs 48.75 after it said it has entered into an agreement to sell its activation business to NetCracker.