Sensex hits over three-week high in thin trading

MUMBAI (Reuters) - Indian shares rose to their highest level in more than three weeks on Monday as investors bought beaten-down stocks such as ICICI Bank in thin trading in the year-end holiday season and ahead of the expiry of derivatives contracts later this week.

Shares of ICICI Bank rose as much as 2.1 percent, bouncing back from a fall of 1.5 percent on Thursday after a central bank report raised concerns over weak corporate balance sheets and bad loans among banks.

Indian markets are expected to remain volatile ahead of the expiry of futures and options contracts on Thursday as traders churn positions.

Volume is also expected to remain thin with majority of foreign investors away for year-end holidays.

"I don't think 7,950-8,000 on the Nifty will be conquered this week, possibly we'll head lower," said Gaurang Shah, vice president at Geojit BNP Paribas.

"We have corporate earnings in the second week of January, so investors will wait to see that and then immediately after you have the (Union) budget."

The Nifty was up 0.54 percent at 7,903.85, after rising to its highest level since Dec. 3 at 7,907.45 earlier in the day.

The Sensex was up 0.56 percent at 25,982.90, after rising to its highest level since Dec. 3 at 25,991.08.

Tata Power shares rose 2.33 percent after the company on Thursday signed an agreement with Russia for energy projects in the country.

Insurer Max India Ltd surged as much as 7 pct to its highest level since Dec. 8 after a court approved a demerger of its business.

All sectors were in the green except telecoms. Bharti Airtel fell 1.6 percent and Idea Cellular slipped 0.8 percent after Reliance Industries rolled out its 4G network for employees, a move seen by many as a soft launch and precursor to full-scale launch next year. Reliance shares were up 0.63 percent.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)