Sensex rises 145 points, inches towards 17K

The market began trading on a subdued note, opening lower at 16,650.05 but turned bullish on hopes of strong quarterly earnings and abundant fund inflows. The benchmark finally settled at 16,886.43, its best close in nearly 16 months, with twenty-four components rising.

The winners' pack was led by India's biggest mortgage lender HDFC, which jumped 5.30 percent. HDFC Bank, State Bank of India and ICICI Bank surged 1.50 percent, 1.41 percent and 0.96 percent respectively.

Technology outsourcers TCS, Infosys Technologies and Wipro soared 2.92 percent, 1.77 percent and 1.28 percent respectively on hopes that the worst may be over for most developed economies, which are the major markets for these companies.

Auto stocks also fared well with Tata Motors, Maruti Suzuki, Hero Honda Motor and Mahindra & Mahindra climbing 2.60 percent, 1.12 percent, 0.86 percent and 0.37 percent respectively.

FMCG majors ITC and Hindustan Unilever advanced 2.59 percent and 1.28 percent respectively.

Other major gainers were Larsen & Toubro (up 0.97 percent), NTPC (up 0.82 percent) and Grasim Industries (up 0.78 percent).

However, bucking the trend, telecom giant Bharti Airtel plunged 3.28 percent on reports that it might have to further sweeten its proposed $24 billion mega-merger with South African MTN.

Sensex heavyweights Reliance Industries and ONGC also ended on a weak note, tumbling 0.11 percent and 0.47 percent respectively.

Other losers were Jaiprakash Associates (down 2.67 percent), Hindalco Industries (down 0.58 percent) and Sterlite Industries (down 0.25 percent).

In the broader market, second-rung stocks kept pace with the benchmarks with the BSE Midcap and Smallcap indexes rising 0.74 percent and 1.05 percent to close up at 6216.99 and 7451.02 respectively.

All the sectoral indices closed in the green except Oil & Gas (down 0.03 percent). The biggest gainers were IT (up 1.91 percent), FMCG (up 1.63 percent) and Realty (up 1.02 percent).

The overall market breadth was positive as 1605 gainers led 1176 losers while 81 closed unchanged

Elsewhere, the broader 50-share S&P CNX Nifty closed 0.89 percent or 44.15 points higher at 5020.20.

According to market analysts, the market is riding a confidence wave triggered by hopes of stronger corporate earnings, increased consumer spending and greater foreign fund inflows.

Analysts said promising growth in advance corporate tax payments for the second quarter has fueled expectations of robust second quarter earning by India Inc.

India's corporate advance tax in September quarter is estimated to have grown 14.7 percent on year against a fall of 3.7 percent in the first quarter of FY10 mainly due to strong recovery in banking, auto and consumer durable sectors, the government said on Tuesday.

Foreign fund inflows were pegged at nearly $1.5 billion this month, market data revealed. So far this year, foreign funds have poured in $9.1 billion after pulling out more than $13 billion in 2008, when the index more than halved and it is hoped that inflows would cross $10 billion by December-end.

However, analysts cautioned that market valuations were overstretched and a correction was in the offing.

"I would be a little cautious at these levels," said Rajen Shah, chief investment officer at Angel Broking.

"It's got to take a turn. It can't just go one way," Shah said, although he added the long-term outlook remained bullish.

Agrees Jigar Shah, research head at Kim Eng Securities."We have the G-20 summit and U.S. Federal Reserve's meetings lined up, which could lead to some correction, but the markets are going through a very positive round of sentiment, backed by solid liquidity," Shah said.