Sensex, Nifty rise to record after China, ECB stimulus boosts risk appetite

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex and Nifty rose to record highs on Monday after the prospect of further policy stimulus in China and Europe whetted risk appetite globally, while expectations of more reforms during the ongoing winter session of parliament also helped.

Global shares rallied as China is ready to lower rates again after Friday's surprise cut to shore up the cooling economy, while European Central Bank President Mario Draghi surprised by declaring his commitment to fighting deflation.

Surprise rate cuts amid other actions by global central banks to support their economies have reinforced expectations that easing consumer inflation will lead the Reserve Bank of India, whose policy review is due on Dec. 2, to ease monetary policy earlier than expected.

Investors also remain hopeful Prime Minister Narendra Modi's government would push for reforms such as the goods and services tax, disinvestment, and changes in land acquisition laws in the winter session of parliament that kicked off on Monday.

"The sentiments were positive from early trades, mainly driven by China's surprise move to cut interest rates for the first time in more than two years," said Jayant Manglik, President-retail distribution, Religare Securities Limited.

Volatility is expected though in the coming sessions due to upcoming events including expiry of November derivative contracts, Manglik added.

The Sensex closed 0.58 percent higher after earlier surging to an all-time high of 28,541.96.

The Nifty ended up 0.62 percent coming off a life high of 8,534.65 hit earlier in the session.

Blue-chips lead the gains. Infosys (INFY.NS) rose 3.1 percent while ICICI Bank (ICBK.NS) ended up 2.5 percent.

State Bank of India rose 1.1 percent while Hero MotoCorp (HROM.NS) gained 1.7 percent.

Metal shares surged on hopes an unexpected rate cut by China will boost demand in the sector.

Tata Steel (TISC.NS) gained 3 percent, Hindalco Industries (HALC.NS) rose 3.3 percent, while Jindal Steel and Power (JNSP.NS) surged 4.2 percent.

Defence suppliers gained on hopes they would bag a major portion of the $2.6 billion worth of mounted gun systems purchase that the government approved on Saturday.

Tata Power Company (TTPW.NS) gained 4.2 percent, Larsen & Toubro (LART.NS) rose 0.2 percent, while Bharat Forge (BFRG.NS) ended 3 percent higher.

Lupin (LUPN.NS) gained 0.7 percent on hopes India has cleared the company's request to raise foreign investment limit, traders said.

Kotak Mahindra Bank (KTKM.NS) closed just 0.05 percent higher on profit-taking at higher levels after the stock rallied to all-time high on Friday on agreeing to buy ING Vysya (VYSA.NS) in an all-share deal.

Among losers, Power Grid Corporation of India (PGRD.NS) fell 2.8 percent on worries index provider MSCI may exclude the stock from MSCI India index, dealers said.

(Editing by Sunil Nair)