Sensex caps third weekly gain as banks rise in late trade

A late surge in Indian lenders and industrials helped the benchmark stock index reverse an intra-day loss and end higher for a third straight week. State Bank of India, HDFC Bank and ICICI Bank were among the best performers on the BSE Sensex, while Larsen & Toubro, the largest engineering company, rose to a one-month high. Maruti Suzuki India and Tata Motors advanced for a second day. RelianceIndustries, the owner of the world's largest refining complex, rose for a fifth day before its results.

The Sensex rose 0.8 per cent to 27,214.60 at the close, after a rally in lenders in the final 90 minutes of the session helped the gauge cap a third week of gains, the longest winning streak since July 5.

Banks climbed as some traders closed bearish bets after a three-day slide in the CNX Bank Nifty index earlier this week, according to Deven Choksey, managing director at K R Choksey Shares & Securities Pvt in Mumbai. The premium on futures tied to the banking gauge almost doubled to Rs 89.2 from Thursday. "Banks have significant weighting on the benchmark index," Choksey said by phone.

Indian stocks have risen with global equities as weak economic data from China, Europe and the US boosted speculation central banks will maintain stimulus measures. Global funds bought $410 million of domestic shares so far this month, after pulling a combined $3.5 billion in August and September.

"The global sentiment has turned positive on bets that the Fed won't raise rates anytime soon," said Shishir Bajpai, a director at Mumbai-based IIFL Wealth Management, which has $12 billion under management and advisory. "India benefits from the risk-on trade."

State Bank climbed 2.4 per cent, HDFC Bank added 1.5 per cent and ICICI Bank rose 1.3 per cent. Larsen increased 2.9 per cent, the best performer on the Sensex. Maruti closed at the highest level since October 1, while Tata Motors rallied to more than a two-month high.