Sensex rises as monsoon aids rate cut hopes; Greece proposals help

MUMBAI (Reuters) - The BSE Sensex and Nifty rose more than 1.5 percent on Monday, heading towards their biggest daily gain in about 1-1/2 months as rate sensitive stocks rose on hopes monsoon may lead to an earlier-than-expected rate cut by the RBI.

The south-west monsoon rains have been 11 pct above normal so far in June, stoking hopes the Reserve Bank of India will cut rates in October than in 2016 as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far.

Indian stocks also extended their gaining streak for a seventh consecutive session as investors snapped up risky assets on optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default.

Greek Prime Minister Alexis Tsipras will meet the heads of the European Commission, European Central Bank and International Monetary Fund on Monday ahead of a summit of euro zone leaders later in the day aimed at reaching a deal over debt talks.

"Progress on monsoon and stance of U.S. Fed by September end would determine whether or not RBI would cut rates in October," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

The BSE Sensex gained 1.5 percent, on track to post its biggest daily rise since May 8 while the Nifty rose 1.53 percent, heading for its biggest daily gain since May 11.

Progress on monsoon, passage of key land and tax reforms in the monsoon session, upcoming GDP data and June-quarter results are key triggers ahead, according to investors and traders.

The Bank Nifty rose 2.9 percent, on track towards its biggest daily gain since March 2.

Media reports related to the central bank's proposal to set the limit for foreign investments for government debt in rupees instead of dollars also helped.

ICICI Bank rose 3.2 percent, while HDFC Bank gained 2.5 percent.

Axis Bank jumped 4.1 percent, while State Bank of India rose 2.2 percent.

Among auto makers, Tata Motors advanced 2.3 percent and Maruti Suzuki India was up 1.4 percent.

Real estate developers were top gainers among BSE stock exchange's large cap stocks. Housing Development and Infrastructure Ltd jumped 10 percent and Unitech rose 9 percent.

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)