Sensex gains; banks up on eased foreign debt rules

Reuters Market Eye - The BSE Sensex gains 0.64 percent, while the Nifty rises 0.7 percent. Banking shares gain after Finance Minister P. Chidambaram said on Saturday India will ease restrictions for foreign institutional investors in government and corporate bonds next month.

Banks are big buyers of debt and could benefit from rising bond prices.

State Bank of India gains 1.3 percent, while ICICI Bank Ltd is up 1 percent.

Oil-related shares gain after Indian Oil Corp (IOC) , the country's biggest refiner, said in a statement it would raise diesel prices by about 1 percent from Saturday.

IOC gains 0.8 percent, while Oil and Natural Gas Corporation Ltd is up 4.85 percent at 1:23 p.m.

Asian shares also gain on Monday after Cyprus did a last-ditch deal with international lenders for a 10 billion euro bailout hours before a deadline to avert a financial collapse on the Mediterranean island.

(Reporting by Abhishek Vishnoi)