MUMBAI, Sept 14 (Reuters) - India's main stock index rose
more than 2 percent to new seven-month highs on Friday after the
government announced a hike in diesel prices and after the
Federal Reserve announced a new asset purchase programme.
State-owned oil companies such as Bharat Petroleum Corp
led the rally after India raised the price of heavily
subsidised diesel on Thursday to rein in its fiscal deficit.
Lenders such as State Bank of India also rose on
expectations the government's fiscal consolidation steps would
increase chances of a rate cut from the central bank, which
reviews policy next on Monday.
Investors are also looking ahead at August inflation data
due later in the day, as well as the government's weekly cabinet
meeting, which is expected to discuss opening up the sector to
foreign direct investment.
"Fuel price announcements coupled with positive global news
flows will provide another boost to markets. This rally should
continue in near term," Jagannadham Thunuguntla, Head of
research at SMC Investments and Advisors Limited.
India's benchmark BSE index rose 2.1 percent as of
0504 GMT, after earlier rising to its highest intraday level
since Feb. 22, and headed for its eighth consecutive winning
The NSE's 50-share index rose 1.97 percent.
Oil stocks led the rally after India raised diesel prices by
5 rupees a litre, a 14 percent increase when taxes are included.
Bharat Petroleum Corp rose 1.9 percent, while
Indian Oil Corp rose 1.6 percent.
Lenders gained on expectations the fuel price hike would
increase the prospect of rate cuts, given Reserve Bank of India
officials were seen as wanting the government to shore up its
finances before considering easing monetary policy.
State Bank of India rose 4.4 percent, while ICICI
Bank rose 4.4 percent.
Shares in software services exporters and metals rose after
the Fed launched an aggressive stimulus program, saying it would
pump $40 billion into the U.S. economy each month until it saw a
sustained upturn in the weak jobs market.
Tata Steel rose 4 pct, while Hindalco Industries
rose 5.4 percent, while Infosys rose 1.9
Airlines rose on hopes that the sector would benefit from a
potential opening up of the sector. SpiceJet extended
gains for a third day, up 6.5 percent.
(Reporting by Abhishek Vishnoi and Manoj Dharra; Editing by