Indian stocks rise 1.5 pct to 10-week closing high
(Updates to close)
* RBI cuts CRR by 50 basis points, banks surge
* RBI signals policy shift towards reviving growth
* L&T, Reliance Inds add to gains in main index
By Anurag Kotoky
NEW DELHI, Jan 24 (Reuters) - Indian shares rose 1.46 percent on Tuesday to their highest close in 10 weeks, after the central bank signalled a policy shift towards reviving growth, boosting appetite for stocks in Asia's third largest economy.
Banks led the gains after the Reserve Bank of India cut the cash reserve ratio, or the proportion of deposits that commercial banks must keep with the RBI, to ease tight liquidity.
Top lender State bank of India rose 5.2 percent, while ICICI Bank gained 3.7 percent. Smaller rival HDFC Bank closed 1 percent higher.
The market rose on hopes that a cut in the CRR will soon lead to softening of interest rates, said Taina Erajuuri, a Helsinki-based portfolio manager at FIM India.
"They (RBI) gave an indication that there could be a repo rate cut somewhere in the future and I think that's important. We will probably see a 25 basis point cut in March or April," Erajuuri said.
The main 30-share BSE index closed 244.04 points up at 16,995.77, its highest closing level since Nov. 14. More than two-thirds of its components ended in the green.
The index has gained nearly 10 percent so far in January.
"February always seems to be a nasty month. We will probably see profit-taking coming in easily in February," Erajuuri, however, said.
Larsen & Toubro Ltd, India's biggest engineering conglomerate, rose 5.8 percent to 1,351.85 rupees, and was the biggest contributor to the gains in the benchmark index.
The company posted better-than-expected results on Monday, mainly on account of a rise in treasury income and larger dividend payouts from its units.
Reliance Industries, India's top listed firm and which contributes about a tenth to the benchmark, gained 1.6 percent after the energy major said it will open its share buyback from Feb. 1, and close the offer on Jan. 19 next year.
Strides Arcolab jumped 17.5 percent to 478.50 rupees after Watson Pharmaceuticals agreed to buy the company's Australian and Southeast Asian generic pharmaceutical business.
The 50-share NSE index rose 1.61 percent to 5,127.35 points. There were about 1.6 gainers for every loser in the broader market. About 874.3 million shares changed hands.
Indian shares rose in contrast to global markets, with European shares opening lower after the region's finance ministers rejected an offer by private creditors to restructure their Greek debt, raising the spectre of a messy default.
At 1017 GMT, the FTSEurofirst 300 index of top European shares was down 0.73 percent. World stocks, as measured by the MSCI world equity index, fell 0.29 percent.
STOCKS THAT MOVED
* Software company KPIT Cummins Infosystems rose 4 percent after its board approved a one-for-one bonus share issue.
* Essar Oil rose 16.7 percent after the company said its coal-bed methane block at Raniganj in West Bengal state holds an estimated 113 billion cubic feet of gas reserves.
MAIN TOP THREE BY VOLUME
* Suzlon on 39.4 million shares
* IFCI on 33.2 million shares
* Lanco Infra on 30.1 million shares
FACTORS TO WATCH * Indian rupee report * Indian bond report * Euro rises vs dollar,sterling as PMI data supports * Brent steady above $110 on Iran, Greece weighs * Debt worries, economy outlook spark market retreat * Wall St rests after rally; bellwether earnings ahead * For closing rates of Indian ADRs (Editing by Aradhana Aravindan)
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