Sensex nears 21,000 mark as ICICI Bank, ITC lead gains

India's Sensitive Index rose to a record. ICICI Bank, the nation's most valuable lender, and cigarette maker ITC Ltd. paced gains.

"There is a build-up of positions ahead of the results season," said Deepak Mehta, head of equity sales at Networth Stock Broking. "Banking stocks are being purchased as they are the closest proxy to strong economic growth."

Infosys Technologies and Tata Consultancy Services dropped on concern the US economy is headed for recession. The US is the main market for domestic software services providers.

The Bombay Stock Exchange's Sensex advanced 125.76 points, or 0.6 per cent, to 20,812.65, a record close for the second day in a row. The gauge of 30 companies rose as much as 0.9 per cent and dropped as much 1.2 per cent earlier.

The S&P/CNX Nifty Index on the National Stock Exchange gained 4.8 points to 6,279.10. Nifty futures for January delivery rose 0.4 per cent to 6,288.20

ICICI Bank gained the most since November 14 on speculation the lender plans to list its brokerage unit. The stock rose Rs 78.55, or 6.1 per cent, to a record 1,363.9.

ITC, India's biggest cigarette maker based in Kolkata, rose the most since November 16. The stock climbed 11.55, or 5.3 per cent, to 231.1. Credit Suisse Group raised its share-price estimate for the company to Rs 242 from Rs 194, citing expectations of strong third-quarter results and a growth in ITC's sale of personal-care products.

"We expect a very gradual scale-up in these businesses "" building brands will be a key challenge," analysts Govindarajan Chellapa and Swapnil Nadkar said in a note to clients. "However, we expect rapid growth in the salted snacks business to continue."

Weak sentiment
Tata Consultancy, the country's largest software services exporter, fell Rs 28.95, or 2.9 per cent, to 976.15. Infosys Technologies, the second largest, declined Rs 56.7, or 3.4 per cent, to 1,638.10.

India's software services industry gets more than 60 per cent of its sales from the US, the world's largest market for such services. Labour Department reports last week showed hiring in the US slowed in December, capping the worst year for job creation since 2003, and unemployment surged to a two-year high 5 per cent.

The Institute for Supply Management separately said growth in US service industries, which make up almost 90 per cent of the economy, cooled last month to the slowest pace in nine months.

The odds of a recession are more than 50 per cent, Harvard University economist Martin Feldstein, head of the group that dates economic cycles in the US, said January 5.

Wipro Ltd, the country's third-ranked software provider, slipped Rs 13.50, or 2.7 per cent, to 483.35 and Satyam Computer Services, the fourth largest, fell Rs 8.8, or 2.1 per cent, to 413.45.

"Sentiment is weak on these technology stocks as an immediate reaction to the data from the US," Networth's Mehta, based in Mumbai, said.

Satyam said it won a "major" contract from the Irish Further Education & Training Awards Council. The company didn't provide details. REL, the second-largest electricity producer by market value, advanced 73.80, or 2.9 per cent, to 2,584.15, a record, on optimism about the proposed listing of its unit, Reliance Power.