Markets up 261 points on hopes of Left deal

Stock markets rose on speculation that the ruling Congress party would reach agreement with allied Communist parties over a proposed nuclear energy deal with the US, helping avert the threat of a mid-term election. Reliance Industries led gains .

"The market is expecting some kind of compromise between the Congress and its Communist allies, which will help diffuse the current crisis," said Nikunj Doshi, who helps manage the equivalent of $541 million in Indian equities at Kotak Mahindra Asset Management Co. in Mumbai. "Investors want political stability to return," he added.

Stocks declined yesterday on concern that the communists would withdraw support from the country's coalition government over the deal, forcing an election about two years ahead of schedule.

The Bombay Stock Exchange's Sensitive Index, or Sensex, climbed 260.89 points, or 1.8 per cent, to 14,424.87, the biggest fluctuation among markets included in global benchmarks. Twenty- nine out of the 30 stocks in the index gained. The measure added 2 per cent this week, its first advance in a month.

The S&P/CNX Nifty Index on the National Stock Exchange added 75.20 points, or 1.8 per cent to 4,190.15. Nifty futures for August delivery rose 1.7 per cent to 4,172.

Reliance, the nation's most valuable company, added 1.8 per cent to Rs 1774.5. State Bank of India, the country's largest lender, rose Rs 51.2 , or 3.6 per cent, to Rs 1,466.25. Bharat Heavy Electricals added Rs 88.75, or 5.3 per cent, to Rs 1,750.4.

"News flow indicates that the leftist parties are still supporting the Congress-led coalition government," Shailesh Jha at Credit Suisse said in a note to clients today.

The ruling coalition has 226 seats in the 545-seat lower house, or Lok Sabha, 47 short of a majority. That shortfall is bridged by the country's communist parties, which together have 59 seats.