Indian shares rally on global cues; ICICI gains

BANGALORE (Reuters) - Indian shares rose to their highest in more than a month on Thursday, powered by lender ICICI Bank after strong U.S. economic data eased some concerns about recession in the world's largest economy.

The gains were underpinned by hopes for strong overseas fund flows into Asia's third-largest economy after a possible interest rate cut by the U.S. Federal Reserve at its meeting on Dec. 11, traders said.

At 11 a.m., the benchmark 30-share BSE index was up 1.16 percent, or 229.61 points, at 19,967.68, after having risen to a high of 20,064.31 in opening deals.

Twenty-three of its components were in the positive zone.

"The market rally has mainly been triggered by strong global cues. I expect this momentum to continue at least till the U.S. Federal Reserve meeting on hopes of a rate cut," said Anuj Anandwala, research analyst at KJMC Capital Markets Services.

At the day's high, the index was just under 1 percent away from its record high of 20,238.16 hit on Oct. 30. The index had shed 2.4 percent in November, but is up 45.5 percent so far this year.

Shares in second-largest lender ICICI Bank was up 2.8 percent at 1,193.55 rupees, after having risen more than 3 percent in opening deals, tracking gains in financials in offshore markets on easing worries about a global credit crisis.

Although Indian lenders are not directly exposed to the U.S. subprime mortgage market, poor sentiment on financial stocks elsewhere weighs on local companies like ICICI and HDFC Bank.

Edelweiss Securities said in a report that the benchmark index was expected to find minor resistance around 20,200-20,500 and on the lower side it had strong support around 19,200-19,000.

"We suggest booking part profit in long position around these levels and shift to other stocks which have not moved up sharply in the near future," it said.

Reliance Industries gained 0.73 percent to 2,924.05 rupees. The Economic Times said on Thursday the largest private refiner was in talks with Kuwait Petroleum Corp for partnering in refining and petrochemicals projects in Kuwait and elsewhere.

A Reliance spokesman declined to comment on the report.

Reports on Wednesday showed U.S. companies added staff in November at the fastest pace in a year and worker productivity rose at the strongest rate in four years in the third quarter.

Shares in Infosys Technologies, India's No. 2 software services exporter, rose nearly 2 percent to 1,634.05 rupees after the U.S. data helped lift some of the worries

surrounding its biggest market.

Data showed foreigners were net buyers of $4.8 million of shares on Tuesday.

Foreign funds had poured more than $7 billion into Indian equities between mid-September and end-October, after a Fed rate cut on Sept. 18. But they were net sellers of about $1.2 billion in November.

The broader 50-share NSE index put on 1.12 percent at 6,006.30, after having risen to a record high of 6,027.05 in the opening deals.

Elsewhere in Asia, Karachi's 100-share index rose 1.22 percent to 14,309.25 and Colombo's All-Share index was up 0.73 percent at 2,532.

STOCKS ON THE MOVE

* Essar Steel Ltd jumped 20 percent, the maximum daily limit, to 71.10 rupees after an appellate tribunal ruled against delisting the shares from Dec. 7.

* Dish TV India Ltd rose nearly 5 percent to 98.85 rupees after the direct-to-home services provider said its board approved raising 2.5 billion rupees through a preferential issue of shares and warrants to Indivision India Partners.

* Pipe maker Maharashtra Seamless Ltd was up 2.4 percent at 594 rupees after the company said it was buying a 200,000 tonnes per annum seamless pipes plant in Romania.

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