Banks drive sensex to 17-month closing high

Mumbai, Oct.16 (ANI): Banking stocks drove the Bombay Stock Exchange (BSE) sensex up by 0.74 percent to its highest close in 17 months despite witnessing a slide in metals maker Sterlite Industries after it sold debt checked the gains on Friday.

Sentiment was also upbeat as optimism about quarterly earnings of companies lifted world stocks towards highs last seen before the collapse of Lehman Brothers.

State Bank of India rose 5.3 percent to a record close of 2,453.90 rupees and top private bank ICICI Bank climbed 2.4 percent, partly on expectations the central bank would keep key interest rates steady at a policy review on October 27.

Morgan Stanley raised its target for State Bank to 3,000 rupees from 2,600 rupees, and maintained its "overweight" rating. It said India's biggest bank was entering a potential up cycle with a much larger balance sheet and low to manageable risk.

The 30-share BSE Index rose 127.62 points to end at 17,322.82, its highest close since May 15, 2008, with half of its components gaining.

The analysts, however, cautioned investors not to speculate with all their prospects in the market as there might be some corrections.

"If the investor wants to take a shot at the market, I mean he or she should not be putting everything they have. But one should invest in... because we may see some corrections. This is result season and we are getting, Q2 results and they are better than expectations. So investor has to wait for an upward revision in earnings then only I can say that the market is not pricy," noted Sunil Shah, a market analyst, Mumbai.

The market rose by 4.1 percent on the week, taking its gains for the year to 79.6 percent. Foreign fund inflows of about $13.6 billion have been a key driver of the market this year.

Indian shares will trade on Saturday in one-hour session from 6:15 in the evening, held every year on an auspicious period of Deepavali festival, which also happens to be New Year of accounting for the traditional Indian trade and industry.

In the broader market, gainers outpaced losers in a ratio of 1.2:1 in a relatively moderate volume of 452 million shares.

The 50-share NSE index closed 0.65 percent higher at 5,142.1, also a 17-month closing high. (ANI)