Sensex starts week on positive note

MUMBAI (Reuters) - The NSE Nifty rose 0.2 percent on Monday, as Larsen & Toubro rallied after maintaining its sales guidance for the year, while sentiment was also supported by better-than-expected manufacturing data.

Traders said investors also drew comfort from the Bank of Japan's unexpected stimulus measures, which had sent Asian shares including in India rallying.

But broader gains were capped ahead of the Reserve Bank of India's policy review on Tuesday. Most analysts expect the Reserve Bank of India (RBI) to hold leave its key interest rate remain on hold.

"Stocks are rallying today on account of BoJ's stimulus which set off a global risk-on. L&T earnings, Yes Bank numbers, along with beaten down valuations have led to a sharp relief rally in many names, said Varun Khandelwal, director at Bullero Capital.

The broader Nifty rose as much as 0.49 percent to start the new month on a positive note.

However, it is still down about 4.8 percent this year.

The benchmark BSE Sensex gained as much as 0.53 percent.

India's L&T gained as much as 5.2 percent after maintaining its guidance for 10-15 percent sales growth for the year ending March 31.

Meanwhile, blue chips benefited after a private survey showed Indian manufacturing activity unexpectedly returned to growth last month.

Yes Bank rose 2.4 percent, after it rose more than 11 percent on Friday on better-than-expected December-quarter earnings.

But among the stocks that fell, Maruti Suzuki slipped 2.9 percent as it reported a fall in January sales, while India's top two lenders State Bank of India and ICICI Bank both lost more than 3 percent ahead of the RBI review.

(Reporting by Manoj Rawal; Editing by Anand Basu)