Sensex rises with Asian counterparts; domestic funds buy

MUMBAI (Reuters) - Indian stocks rose on Monday along with their Asian counterparts while aggressive buying by domestic funds also lent support to the market.

Local shares benefited from renewed investor risk appetite with markets seemed more sure-footed as months of uncertainty over the timing of a hike in U.S. interest rates got over last week after the Federal Reserve raised rates for the first time in nearly a decade.

A holiday-shortened week and hopes that Parliament would pass the crucial bankruptcy bill also boosted sentiment.

"Most of the global players are on vacation now and domestic investors are supporting the market with buying action in mid-caps, so the markets seem more favourable," said Deven Choksey, managing director, K R Choksey Securities.

Foreign institutional investors, who have been net buyers so far this year, have offloaded 49.32 billion rupees ($743.78 million) worth of equities this month.

The Nifty was up 0.73 percent at 0800 GMT, while the Sensex rose 0.68 percent.

Gains were led by blue-chip stocks such as ICICI Bank , which rose 3.2 percent.

Shares of Utility vehicle maker Mahindra and Mahindra (M&M) recovered after a torrid last week over a court ruling temporarily banning diesel vehicle registrations in the capital. M&M shares gained 2.8 percent.

Miner Vedanta rose 1.72 percent on upbeat Chinese markets.

Meanwhile, the biggest drag on the NSE index was Sun Pharmaceutical Industries , India's largest drugmaker, which skid more than 7 percent after U.S. regulators warned of standards violations at a key plant.

($1 = 66.3100 rupees)

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