Fed cut buzz buoys Sensex by 240 points

The Sensex rose for the third day, led by Reliance Energy, the nation's second-biggest utility by market value, on speculation the US Federal Reserve will cut interest rates to boost growth.

"A declining return on US treasuries will mean more allocation to funds in emerging markets, including India,'' said R K Gupta, who manages $100 million of stocks at Credit Capital Asset Management in New Delhi.

"The timing is crucial as foreign institutional investors and hedge funds are firming up their fund allocation for the next calendar year.''

The Bombay Stock Exchange's Sensex gained 240.22, or 1.2 per cent, to 19,603.41 at the 3:30 pm close.

The S&P CNX Nifty Index on the National Stock Exchange rose 102.25, or 1.8 per cent, to 5,865. Nifty Futures for December delivery added 1.3 per cent to 5,876.

Reliance Energy gained Rs 162.05, or 9.3 per cent, to 1,900.15, its biggest increase in more than one month.

The company's board yesterday approved the infusion of Rs 8,000 crore ($2 billion) of equity capital as it seeks to fund power, highway, metro and real-estate projects in India.

The capital will be raised through a preferential offer of equity shares or equity-related securities to the Reliance Anil Dhirubhai Ambani Group, Life Insurance Corporation and five other insurance companies that own shares in Reliance Energy, the company said.

Other power-related stocks, including NTPC and Bharat Heavy Electricals, also gained. NTPC, the nation's biggest power producer, added Rs 3.20, or 1.4 per cent, to Rs 239.85.

Bharat Heavy, the country's biggest power-equipment maker, advanced Rs 81, or 3 per cent, to Rs 2,761.25.

Tata Consultancy rose Rs 39, or 3.9 per cent, to Rs 1,052.95, its largest increase in two months. Wipro added Rs 33.10, or 7.2 per cent, to Rs 493.40, the biggest gain in almost nine months.

Satyam Computer Services, the fourth largest, rose Rs 8.05, or 1.8 per cent, to Rs 448.

Wipro expects alliances with overseas software and equipment makers led by Cisco Systems and Microsoft to generate more than $2 billion in annual sales within three years, Chairman Azim Premji said in an interview yesterday.

Overseas funds sold a net $242.3 million of Indian shares on November 29, bringing their total equity purchases this year to $15.9 billion, according to the Securities and Exchange Board of India's website.