Economy-Finance

Banks propel Indian shares higher on rate cut hopes

 * Market boosted by rate cuts by U.S. Fed, Bank of Japan

 * ICICI Bank up 10.8 pct, HDFC Bank gains 11.5 pct

 * Outsourcing firms rally on U.S. hopes

 * Bharti gains after results, Suzlon falls on Q2 loss (Updates to midday)

 MUMBAI, Oct 31 (Reuters) - Indian shares rose more than 9percent on Friday, led by banks on speculation the central bankmay ease monetary policy following rate cuts across the world,including in the United States, China and Japan this week.

 Top private lenders ICICI Bank (ICBK.BO: Quote, Profile, Research, Stock Buzz) rose 10.8 percentto 383 rupees and HDFC Bank (HDBK.BO: Quote, Profile, Research, Stock Buzz) climbed 11.5 percent to1,054.8 rupees. The sector index  rose 8.4 percent.

 Telecoms operator Bharti Airtel (BRTI.BO: Quote, Profile, Research, Stock Buzz) extended gains tomore than 8 percent at 665 rupees after it reported 27 percentrise in September quarter profit that lagged forecasts but saidit expected better results in the coming year. [ID:nDEL237049]

 Shares in wind turbine maker Suzlon Energy Ltd (SUZL.BO: Quote, Profile, Research, Stock Buzz)were down 2.3 percent at 45.10 rupees after it posted aconsolidated net loss of 1.3 billion rupees ($26.3 million) forthe September quarter, compared with 3.75 billion rupees profita year ago.

 By 12:11 p.m. (0641 GMT), the 30-share benchmark index wasup 7.2 percent at 9,698.66 points after rising as high as9,859.25, with all its components rising.

 In the broader market, gainers beat losers by about 2:1 onvolume of 118.55 million shares.

 Traders said the market was catching up with sharp ralliesin overseas bourses on Thursday, when the local exchange wasclosed for a holiday.

 "Markets are reacting positively to the co-ordinatedliquidity boosting measures," said Jayesh Shroff, fund managerat SBI Mutual Fund, referring to rate cuts across the world.

 Markets around the world rallied on Thursday after the U.S.Federal Reserve cut interest rates to their lowest since June2004 to soften the blow of a potentially deep U.S. recession.

 On Friday, the Bank of Japan cut rates for the first timein seven years, to 0.30 percent from 0.50 percent joiningglobal efforts to contain the financial crisis.

 Traders said the concerted cuts raised expectations theReserve Bank of India, which had slashed its key short-termlending rate by 1 percentage point early last week, would againlower rates.

 Stocks in outsourcing firms rose on hopes the U.S. rate cutwould help their financial services clients to tide over thecrisis. Shares in bellwether Infosys Technologies (INFY.BO: Quote, Profile, Research, Stock Buzz)rose 9 percent to 1,421 rupees and top outsourcer TataConsultancy Services (TCS.BO: Quote, Profile, Research, Stock Buzz) added 7.6 percent to 583 rupees.

 Top vehicle maker Tata Motors (TAMO.BO: Quote, Profile, Research, Stock Buzz) rose 8.2 percent to170.10 rupees and Hindalco Industries (HALC.BO: Quote, Profile, Research, Stock Buzz) rallied 11.8percent to 59.40 rupees ahead of their quarterly results.

 Shroff said the key to sustaining the market recoverydepended on foreign institutional investors (FIIs).

 "FII outflow needs to slow down for any rally to sustain.It remains to be seen if a large part of their selling isover," he said.

 The FIIs have sold a net $12.9 billion of Indian shares in2008, compared with record inflows of $17.4 billion in 2007.

 Despite the stocks recovery, the main index is poised topost one of its worst monthly performance. The benchmark isdown 24 percent this month and off 52 percent on the year.

 The broader 50-share NSE index .NSEI was up 6 percent to2,859.15.

 STOCKS ON THE MOVE

 * Eicher Motors (EICH.BO: Quote, Profile, Research, Stock Buzz) was up by its daily limit of 20percent at 199.65 rupees after the truck maker's board approveda share buyback at up to 691.68 rupees a share.

 * Tata Chemicals Ltd (TTCH.BO: Quote, Profile, Research, Stock Buzz) was up 12 percent at 149.50rupees, after the chemicals and fertilisers maker posted a 51percent jump in September quarter net profit to 2.16 billionrupees.

 * Jindal Steel and Power Ltd (JNSP.BO: Quote, Profile, Research, Stock Buzz) rose 13.8 percent to784.10 rupees, after it reported a 62 percent jump in quarterlynet profit to 4.5 billion rupees.

 MAIN TOP THREE BY VOLUME

 * Suzlon Energy on 8.38 million shares.

 * Hindalco Industries on 7.82 million shares.

 * Reliance Petroleum (RPET.BO: Quote, Profile, Research, Stock Buzz) on 5.10 million shares.

 FACTORS TO WATCH * India rupee up on stronger Asian units, stocks        [INR/] * Indian bond yields at 8-½   mo low on cash rate hopes   [IN/] * FOREX-U.S. dollar gains vs euro as month-end looms    [FRX/] * Oil falls to $65 as U.S. economy shrinks               [O/R] * GLOBAL MARKETS-Global stocks rally on rate cuts, oil slides[MKTS/GLOB] * US STOCKS-Rate-cut optimism lifts market, but off peak  [.N] * For closing rates of Indian ADRs                     INADR  (Reporting by Prashant Mehra and Narayanan Somasundaram;Editing by Ranjit Gangadharan)