Sensex spikes 468 points, Bank Nifty up 3% ahead of RBI policy

Benchmark as well as broader indices rallied 2 percent on Monday ahead of RBI policy review. Economists expect the central bank to keep policy rates unchanged.

''Any small economic recovery could lead to inflationary pressures and to that extend monetary policy needs to remain restrictive,'' says Kotak while Edelweiss says stance on liquidity will be keenly watched and expects RBI to maintain anti-inflation stance in policy.

The 30-share BSE Sensex surged 467.51 points to 24684.85 and the 50-share NSE Nifty rose 132.55 points to 7362.50, recouping last week's losses.

The optimism in market was also on account of some developments (from the finance ministry) in banking and insurance sectors. Finance ministry's sources told CNBC-TV18 that it is working on creation of holding company for PSU banks' recapitalisation . It may announce steps to check rising bad loans in budget, say sources.

According to sources, there is a proposal to raise FDI cap in pharma and general insurance to 49 percent.

Stocks in action
BSE Capital Goods index hogged the limelight, rising 5 percent. Bank Nifty was up 3.2 percent while BSE Oil & Gas gained 2.9 percent followed by Power, Metal and Auto with 1-2 percent. However, defensives like healthcare and FMCG saw selling pressure.

Larsen and Toubro was the top gainer in trade today, rising 6 percent to close at record high of Rs 1,645.40 on the BSE after reporting strong numbers in Q4. Net profit jumped 69 percent year-on-year. Barclays has raised 12-month price target by 13 percent to Rs 1,813 while Deutsche Bank raised 12-month target price to Rs 1,905 a share.

India's largest lenders State Bank of India, ICICI Bank, HDFC Bank and Axis Bank gained 3-4 percent. Housing finance company HDFC was up over 2 percent.

State-run oil & gas company ONGC surged 5.5 percent followed by top telecom operator Bharti Airtel with 5 percent. Tata Steel, GAIL, BHEL and Tata Power were up 2-4 percent.

Maruti Suzuki jumped 2.5 percent after reporting superb numbers in May. Total sales grew 19.2 percent to 1 lakh units compared to the year-ago period. Bajaj Auto and Hero Motocorp gained 1-1.5 percent post monthly sales numbers.

However, ITC, TCS, Sun Pharma, Wipro, Dr Reddy's Labs and NTPC were losers, down 0.4-1.3 percent.

In the midcap space, Syndicate Bank, Central Bank of India, Cholamandalam, Max India (led by hopes of hike in FDI in insurance) and Suzlon Energy (post significant cut in losses in Q4) rallied 10-12 percent. Among smallcaps, Bombay Burmah, Uflex, NOCIL, Dhanlaxmi Bank and Atlanta were up 13-20 percent.

About 2003 shares advanced and 979 shares declined on the BSE.

03:50 pm Gold import
The government today slashed import tariff value on gold and silver to USD 408 per 10 grams and USD 617 per kg respectively, in view of weakness in bullion prices globally.

In the second fortnight of May, tariff value on imported gold stood at USD 424 per 10 grams and silver at USD 650 per kg.

The import tariff value - base price at which customs duty is determined to prevent under-invoicing - is revised on a fortnightly basis taking into account the volatility in global prices.

The reduction in tariff value on imported gold and silver has been notified by the Central Board of Excise and Customs, an official statement said.

03:40 Market closing
The market closed with bumper gains as it gained steadily throughout the day. The Sensex was up 467.51 points or 1.93 percent at 24684.85, and the Nifty closed at 7362.50, up 132.55 points or 1.83 percent.

About 2004 shares have advanced, 980 shares declined, and 106 shares are unchanged.

Bank, capital goods, oil & gas and metal stocks lend major support to the indices. Bank Nifty was up 3 percent while Capital Goods index gained 5 percent and Oil & Gas index jumped 3 percent.

Banking stocks remained favourite in today's trade as Reserve Bank of India is expected to maintain status quo in its monetary policy review tomorrow. SBI, HDFC twins, ICICI Bank and Axis Bank gained 2-4 percent each.

L&T, ONGC, Bharti Airtel and Tata Steel were major gainers in the Sensex. Among the losers were Dr Reddy's Labs, Sun Pharma, ITC, Wipro and NTPC.

03:30 pm International markets
Reassuring Chinese factory data and another record high for Wall Street lifted world stocks and commodities on Monday, as markets waited to see how far the European Central Bank will go with policy easing plans this week.

China's manufacturing activity expanded at the fastest pace in five months in May, data showed on Sunday, reinforcing views that the world's second-largest economy is regaining momentum after a wobble at the start of year.

Basic resources stocks including miners and other commodity companies were the biggest gainers as the main bourses in London and Frankfurt started what is set to be a busy week for markets on a positive note

03:15 pm Market check.
The Sensex is up 460.29 points or 1.90 percent at 24677.63 and the Nifty is up 132.85 points or 1.84 percent at 7362.80.  About 1950 shares have advanced, 1014 shares declined, and 106 shares are unchanged.

03:10 Fund raising plans
Encouraged by a bullish market, a large number of companies are lining up to raise funds through issuance of shares and other securities with at least five of them having announced plans in the past fortnight to garner over Rs 15,000 crore.

These plans started taking shape soon after a decisive electoral mandate emerged on May 16. The new government led by Prime Minister Narendra Modi bolstered market sentiment, spurring fund-raising activities.

Companies which have already announced plans to raise funds include HDFC Bank, Jaiprakash Power Ventures, United Bank of India, BF Utilities and Amtek Auto. All these firms, barring United Bank, have received their respective board's approval. Besides, many other companies have begun discussions with investment bankers and their internal teams for garnering funds through routes such public offers of shares, convertible debentures and other securities.

02:56pm Maruti Suzuki expects good growth in rural business
Mayank Pareek, COO (sales and marketing), Maruti Suzuki says the company is eyeing double-digit growth in FY15. "Car sales revival has begun and we have been clocking high retail volumes every month," he adds. He expects retail volume to touch 1.2 lakh units in June.

According to him, rural share in FY15 is likely to be 32-33 percent versus 30 percent in FY14.

02:50pm Aurobindo Pharma under pressure
Aurobindo Pharma shares fell 4 percent despite strong numbers in the fourth quarter. Fall in the stock may be due to profit booking as it rallied more than 11 percent in last two weeks.

Consolidated net profit of the healthcare company grew 362 percent on yearly basis to Rs 501.8 crore and net revenue jumped 48.5 percent to Rs 2,306 crore in the quarter ended March 2014.

Aurobindo reported a forex gain of Rs 35.56 crore during the quarter as against loss of Rs 1.3 crore in the year-ago period while its tax expenses jumped to Rs 165.28 crore from Rs 44.52 crore during the same period.

02:40pm Tata Power commissions 25 MW solar farm in Maharashtra
Tata Power has commissioned its second solar power project of 25 MW capacity at Palaswadi in Maharashtra.

It has developed a 25 MW solar photovoltaic power project, through its subsidiary, Tata Power Renewable Energy Ltd (TPREL), the company said in a statement.

The project with an overall cost of Rs 250 crore is being funded through debt and equity. TPREL had tied up the entire debt requirement through IDFC Ltd in February this year. It received the first loan disbursement on February 28, 2014, reports PTI.

02:30pm SAIL in focus
Sources told CNBC-TV18 that SAIL emerged lowest bidder for NTPC steel plate tender. NTPC will award Rs 300 crore steel plate order to SAIL, say sources. The stock gained 4 percent.

02:20pm Interview
Bajaj Auto Managing Director Rajiv Bajaj sees motorcycle sales tempering near term , but is hopeful of three-wheeler sales rising.

The company sold a total of 3.51 lakh vehicles in May, 5 percent more than what it did in April.

In an interview with CNBC-TV18, Bajaj said better exports would boost the company's operating margins.

The company exported 1.56 lakh units in May, compared to 1.5 lakh units in April. Year-on-year, exports were up a robust 40 percent.

He said the company's market share in the motorcycle segment was stady at 19 percent. Monthly sales of Boxer brand were up nearly 40 percent to 70,000, but the Discover brand continued to pose a challenge, Bajaj said.

02:10pm FII View
The bond market is currently not factoring in any change in the RBI monetary policy of Tuesday, said Neeraj Gambhir of Nomura.

He expects a status quo on rates, however, Gambhir thinks markets will look forward to the guidance by the RBI with regard to factors like inflation, El Nino.

Highlighting Budget to be the next trigger, he expects rupee to remain stable till then. ''It's been pretty sustained rally for the rupee over the last month or so. It emerged as one of the most outperforming currencies among the emerging markets.''

He sees more flows into India if the Union Budget is reformist.

02:00pm Equity benchmarks continued to be on strong footing supported by banking & financials, PSU, oil & gas and capital goods stocks. The Sensex rose 408.60 points or 1.69 percent to 24625.94 and the Nifty climbed 118.95 points or 1.65 percent to 7348.90. Advancing shares outnumbered declining ones by a ratio of 1860 to 1033 on the BSE.

Bank Nifty gained 421 points to 15214 as top lenders State Bank of India, ICICI Bank, HDFC Bank and Axis Bank rallied 3-4 percent. Housing finance company HDFC jumped nearly 3 percent.

Engineering and construction major Larsen & Toubro spiked 6 percent after reporting strong numbers in fourth quarter. ONGC, Tata Steel, BPCL and Jindal Steel climbed 3-4 percent.

However, Sun Pharma, ITC, Wipro, Dr Reddy's Labs, HUL, HCL Technologies and Lupin fell 1-2 percent.

1:50 pm Interview: Bajaj Auto Managing Director Rajiv Bajaj sees motorcycle sales tempering near term , but is hopeful of three-wheeler sales rising. The company sold a total of 3.51 lakh vehicles in May, 5 percent more than what it did in April.

In an interview with CNBC-TV18, Bajaj said better exports would boost the company's operating margins. The company exported 1.56 lakh units in May, compared to 1.5 lakh units in April. Year-on-year, exports were up a robust 40 percent. He said the company's market share in the motorcycle segment was stady at 19 percent. Monthly sales of Boxer brand were up nearly 40 percent to 70,000, but the Discover brand continued to pose a challenge, Bajaj said.

1:40 pm FII outlook: Rishav Dev, Quant Capital sees 2014 as a record year for equity inflows into India. It could be to the tune of around USD 30 billion. The inflows are predominantly from US Funds, he adds.

India, he says is a attracting maximum inflows compared to other emerging market.

The year 2012-13 had seen a record inflow both into debt and equity to the tune of USD 46 billion, and this year on a consolidated basis already USD 15 billion have entered India markets both into debt and equity combined, so we could be close a similar figure of USD 46 billion figure again for 2014-15 says Dev..

Similarly, with regards to debt fund flows too, given the differential between US Treasuries and Indian bonds, he is hopeful of more inflows in the coming month

1:30 pm Buzzing: Aurobindo Pharma shares fell more than 5 percent intraday despite strong numbers in the fourth quarter. Fall in the stock may be due to profit booking as it rallied more than 11 percent in last two weeks.

Consolidated net profit of the healthcare company grew 362 percent on yearly basis to Rs 501.8 crore and net revenue jumped 48.5 percent to Rs 2,306 crore in the quarter ended March 2014.

"We continue to invest in building a quality organization as we focus on optimising the mix of products and markets in line with capacities to drive operating efficiencies. We are also making steady progress on our differentiated product offerings especially with the parenterals gaining traction in advanced geographies," says N Govindarajan, managing director.

1:20 pm Asian markets: Encouraging China factory data and another closing record on Wall Street lifted Asian equities and commodities, while the euro held recent gains against the dollar but remained on shaky ground ahead of a closely watched European Central Bank meeting.

The upward momentum was seen spilling over into European equities, with financial spreadbetters forecasting Britain's FTSE to open up as much 0.32 percent, Germany's DAX 0.26 percent higher and France's CAC to open flat.

Tokyo's Nikkei led by way, rising 2.1 percent, while Australian shares added 0.3 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. Greater China markets were closed on Monday for a holiday.

The market is seeing strong gains with support from banks, capital goods, oil & gas and auto stocks. The Sensex is up 375.57 points or 1.55 percent at 24592.91 and the Nifty is up 110.75 points or 1.53 percent at 7340.70. About 1765 shares have advanced, 974 shares declined, and 101 shares are unchanged.

Bank and financial stocks are in focus with SBI, HDFC and Axis Bank gaining 3 percent each ahead of Reserve Bank of India's monetary policy review. The RBI is likely to keep rates unchanged when it reviews its monetary policy on Tuesday, its first under the new government spearheaded by Narendra Modi.

L&T, SBI, ONGC, HDFC and Axis Bank are top gainers in the Sensex. Among the losers are HUL, Sun Pharma,Wipro, ITC and Dr Reddy's Labs.

In auto sales, Maruti posts superb sales numbers, beating street estimates. Bajaj Auto reports good sales overall boosted by exports. However, domestic segment continues to be under pressure. In M&M weakness continues with total sales down 13 percent year-on -year.

Meanwhile, Prime Minister Narendra Modi will be meeting the cabinet ministers today ahead of the parliament session. He is expected to discuss the agenda for the session. The SIT on black money appointed by the Modi government will meet for the first time today. The meeting is likely to discuss the modalities of the probe and how they plan to proceed.
12:55pm TVS Motors Company gains 2%

India's third largest two-wheeler maker (listed) TVS Motor Company sold 2.1 lakh units in May, a growth of 27 percent compared to the year-ago period with the exports rising 42 percent year-on-year to 34,623 units.

12:45pm Market Expert
Rishav Dev, Quant Capital sees 2014 as a record year for equity inflows into India. It could be to the tune of around USD 30 billion; the inflows are predominantly from US Funds, he adds.

India, he says is a attracting maximum inflows compared to other emerging markets.

The year 2012-13 had seen a record inflow both into debt and equity to the tune of USD 46 billion, and this year on a consolidated basis already USD 15 billion have entered India markets both into debt and equity combined, so we could be close a similar figure of USD 46 billion figure again for 2014-15, says Dev..

Similarly, with regards to debt fund flows too, given the differential between US Treasuries and Indian bonds, he is hopeful of more inflows in the coming month.

The month of May itself saw an inflow of USD 3.3 billion on the debt side. Only April was an aberration because RBI had placed restrictions on buying treasury bills, he adds.

12:40pm NMDC spikes 3.5%
Shares NMDC rallied 3.5 percent as record production and sales drove its March quarter net profit to Rs 1962.14 crore, up 34 percent on an yearly basis.

Total income from operations during the quarter was at Rs 3,884.49 crore, up 21.2 percent over Rs 3,204.25 crore in the year-ago period. The mining company achieved record production and sales of iron ore during the quarter at 9.86 million tonne and 9.4 million tonne, respectively.

Kotak has an add rating on the stock with an increased target price of Rs 180. Axis Capital maintains buy and revised target price to Rs 202 versus Rs 167.

12:30pm Interview
Kirti Vagadia, group head-finance, Suzlon Group says favourable product mix was the key factor for the wind turbine maker's impressive performance in Q4.

Suzlon Energy shares rose as much as 10 percent after its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the March quarter turned positive after a gap of seven quarters. Its net loss for the quarter ended 31 March narrowed to Rs 603.45 crore from Rs 1,912.72 crore in the year-ago period, helped by cost reductions and restructuring of operations.

Vagadia says the company will turn PAT-positive if it achieves revenue of Rs 7,000-7,500 crore on a quarterly basis. Currently, it has a order backlog of Rs 46,000 crore.

The debt-laden company has plans to raise about Rs 1,000 crore from sale of non-core assets this fiscal year. Besides, Suzlon is exploring new markets for business opportunities. The company has already mopped up more than Rs 700 crore by selling two non-core assets.

12:20am MTNL on buyers' radar
MTNL surged 6% on reporting a profit of Rs 9,600 crore in Q4FY14 driven by a exceptional gain of Rs 10,216 crore. It also reported a operational profit for the first time in many quarters as employee costs decline.

12:10pm Economists expect status quo policy
Arun Singh, senior economist, Dun & Bradstreet India says, ''While the WPI inflation has moderated during Apr-14 on the back of fall in food articles, CPI inflation has witnessed an uptick. Moreover, while the core - WPI inflation remains well within the comfort zone of the RBI, the core CPI inflation remains elevated and sticky. The dichotomy within the inflation numbers continues amidst the severe slowdown in the industrial activity."

"While the RBI is expected to keep the interest rates unchanged during the upcoming policy review, a credible fiscal consolidation plan coupled with tangible measures to bring down inflation by the new government might lead to an easing of monetary policy earlier than expected," he adds.

12:00pm Equity benchmarks extended gains in afternoon trade with the Nifty reclaiming 7300-mark supported by banking & financials, capital goods and oil & gas stocks.

The Sensex rose 373.65 points or 1.54 percent to 24590.99 and the Nifty jumped 111.50 points or 1.54 percent to 7341.45. About 1726 shares have advanced, 914 shares declined, and 109 shares are unchanged.

Government official told CNBC-TV18 that equity of all PSU banks would be transferred to holding company. The government is working on holding company for PSU banks' recapitalisation and that holding company will raise funds for public sector banks, says official.

India's largest lender State Bank of India rallied 4 percent followed by ICICI Bank, HDFC Bank and Axis Bank with 2-3 percent. Housing finance company HDFC climbed 2.6 percent.

Engineering and construction major Larsen & Toubro surged 6 percent post strong performance in Q4.

12:00 pm Market outlook: Nilesh Shah, MD & CEO, Axis Capital expects a multiyear bull run based on not just FII, but also flows from domestic investors. Despite the heady run up, he believes valuations are in favour of investors as earnings have almost doubled. ''The domestic ownership of equities is at all-time low levels. From hereon we think it is not only the FII flows but also the domestic flows which will turn positive,'' he told CNBC-TV18.

Shah advises investors to go underweight gold, which he says is an ''unviable investment''. ''We have been negative gold for a long time and this is one of the calls we have been right all through the way,'' he says.

Nilesh Shah, MD & CEO, Axis Capital expects a multiyear bull run based on not just FII, but also flows from domestic investors. Despite the heady run up, he believes valuations are in favour of investors as earnings have almost doubled. ''The domestic ownership of equities is at all-time low levels. From hereon we think it is not only the FII flows but also the domestic flows which will turn positive,'' he told CNBC-TV18's Latha Venkatesh and Sonia Shenoy. Shah advises investors to go underweight gold, which he says is an ''unviable investment''. ''We have been negative gold for a long time and this is one of the calls we have been right all through the way,'' he says.

11:50 am PMI: Indian factory activity expanded at a slightly faster pace in May, while input prices rose at their slowest rate in over a year, a business survey showed on Monday. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, edged up to 51.4 in May from 51.3 in April.

Still, that was slightly below the 51.6 median forecast in a Reuters poll. A figure above 50 indicates monthly expansion. The new orders sub-index, which includes domestic demand as well as orders from abroad, rose to 53.2 in May, a three-month high, from 52.5. A rise in the new orders index often is followed by better output in following months.

11:40 am Circuit: Shares of Suzlon Energy, the world's fifth largest turbine maker, are locked at 10 percent upper circuit after it reported significant improvement in quarter earnings.

The company has reduced its net loss to Rs 603 crore in the quarter ended March 2014 as against loss of Rs 1,913 crore in same quarter last year on consolidated basis. Total income increased 53 percent to Rs 6,645 crore from Rs 4,336 crore during the same period by leveraging on a favourable geographic and product mix with focus on cost reduction.

"We turned EBITDA and EBIT positive after 7 quarters. Our Q4 EBIDTA show significant improvement by Rs 923 crore on Y-o-Y basis," says Kirti Vagadia, Group Head of Finance.

Suzlon Energy says order book of the company stands at Rs 46,141 crore or USD 7.6 billion as on March 31.

11:30 am Macro growth: Former RBI governor Bimal Jalan feels growth should be given a higher weightage over inflation taming now that the investment climate has turned positive.

In an interview to CNBC-TV18, Jalan said he was hopeful that the economy would grow over 5 percent this fiscal, and 6 percent the next. The Reserve Bank of India will be reviewing its monetary policy on Tuesday. The majority view is that the central bank is likely to keep rates unchanged. Jalan said while the general consensus is that inflation should not escalate, of more importance would be the investment policy to boost growth.

11:20 am Buzzing: Shares of M&M fell around 2.5 percent intraday dragged by its weak May auto sales numbers. The utility vehicle maker's total sales fell 13 percent year-on-year to 37869 units in May. Sales of its passenger vehicles (UV and Verito) were down 19 percent (Y-o-Y) while four-wheeler commercial (Maxximo, Gio, Genio ) saw a decline of 13.5% and three-wheeler sales slipped 7 percent.

Brokerages are mixed on the stock after the March quarter results. Credit Suisse maintains outperform rating with a target price of Rs1,350 per share. The firm feels that new launches in UV segment in 2015 will help revive its market share while sentiment in rural India is unlikely to fall.

Credit Suisse continues to prefer M&M, Ashok Leyland and Maruti Suzuki in the auto segment.

However, Bank of America Merril Lynch maintains underperform rating but raises target price to Rs 1,035 per share. It warns that auto business is expected to remain subdued in FY15.

The market is holding its gains quite well with the Nifty above 7250. The Nifty is up 48.95 points at 7278.90 while the Sensex is up 157.63 pointsat 24374.97.

About 1618 shares have advanced, 744 shares declined, and 71 shares are unchanged.

L&T is up 6 percent while Bharti Airtel, BHEL, Maruti and ONGC are top gainers in the Sensex. Among the losers are NTPC, ITC, Wipro, M&M and TCS.

Rupee is off lows on profit taking on dollar positions by traders. Gilts are steady amid lack of firm cues. Dealers avoid building fresh positions on caution ahead of the RBI monetary policy review.

Most Asian currencies trade flat to marginally lower against the US dollar tracking the overall strength in the dollar globally. The euro trades lower against the dollar.

Crude prices are marginally higher on the back of positive Chinese data while gold bounced back marginally after falling on Friday for the fifth consecutive session.

Asian markets trade mostly mixed with the Nikkei at 8-week highs. Positive Chinese manufacturing data expanded at its fastest pace in five months helped sentiment. Participation is low since the Chinese, Hong Kong and Taiwanese markets are closed on account of the Dragon Boat Festival.

11:00am Gitanjali Gems slips 7%
Gitanjali Gems has posted consolidated net loss of Rs 90 crore in Q4FY14 as against profit of Rs 118.9 crore in same quarter last year.

Net sales declined sharply to Rs 2,753.5 crore from Rs 4,750.5 crore during the same  period.

10:50am Oil marketing companies in focus
Oil markeing companies like HPCL and BPCL gained 3 percent as diesel price were hiked by 50 paise per litre for June, thereby reducing the losses from diesel sales to Rs 2.80 per litre only.

Goldman Sachs says this implies that the diesel losses are likely to fall to zero in the next six months, assuming no major changes in oil prices, diesel cracks and currency.

10:40am Hero Motocorp gains 1%
Hero MotoCorp, India's largest maker of motorcycles and scooters, said its May sales rose 8 percent from a year earlier to 6,02,481 units.

The May figures were up from 571,054 units in April and 557,890 units in May 2013.

Since its 2011 split from Japan's Honda Motor Co, Hero has been investing heavily in technology to develop new bikes and increasing its push into overseas markets, reports Reuters.

10:30am Market Expert
Nilesh Shah, MD & CEO, Axis Capital expects a multiyear bull run based on not just FII, but also flows from domestic investors. Despite the heady run up, he believes valuations are in favour of investors as earnings have almost doubled.

''The domestic ownership of equities is at all-time low levels. From hereon we think it is not only the FII flows but also the domestic flows which will turn positive,'' he told CNBC-TV18.

10:20am M&M falls 2 post auto sales numbers
Mahindra and Mahindra's total auto sales declined 13 percent year-on-year to 37,869 units in May. Passenger vehicles (Utility vehicles and Verito) sales fell 19 percent Y-o-Y to 18,085 units.

Four-wheeler commercial vehicle sales dropped 13.5 percent while three-wheeler sales were down 7 percent.

10:10am RBI policy on June 3
Nandan Chakraborty, Axis Capital says the brokerage house believes the RBI is unlikely to react to the current growth numbers as they are largely in-line with expectations.

"The RBI Governor Raghuram Rajan has mentioned that both the Government and the Central Bank are in unison over the need to bring down inflation, while respecting the fact that economic growth is very weak," he adds.

10:00am Equity benchmarks rebounded with the Sensex gaining more than 100 points supported by banking & financials, oil & gas, capital goods and auto stocks. However, healthcare and FMCG stocks declined.

The Sensex rose 122.71 points to 24340.05 and the Nifty advanced 37.05 points to 7267. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising over 1 percent. About 1377 shares have advanced, 588 shares declined, and 54 shares are unchanged.

Engineering and construction major Larsen & Toubro surged over 4 percent after its fourth quarter net profit jumped 69 percent. The stock is Deutsche Bank's top Asian pick. It has raised 12-month target price to Rs 1,905 per share.

Shares of HDFC, HDFC Bank, Infosys, ONGC, Bharti Airtel, State Bank of India, Axis Bank, Hindalco Industries, Maruti Suzuki, BHEL and GAIL gained 1-2 percent.

However, ITC, TCS, Mahindra & Mahindra, NTPC, Hindustan Unilever and Sesa Sterlite fell 1-2 percent.

10:00 am QIP: The state-run Union Bank of India is set to launch its Rs 1,386-crore qualified institutional placement (QIP) issue in the second quarter of this fiscal, a top official has said. "We will be launching the issue in the quarter starting July, for sure. We have reason to believe that it will be a successful one," Union Bank Chairman and Managing Director Arun Tiwari said.

The infusion was first planned in the fourth quarter of the past fiscal, but was called off considering poor market conditions.

9:50 am Gear up for budget: Governor of the Reserve Bank of India Raghuram Rajan on Sunday met Prime Minister Narendra Modi for discussions over the Union Budget. Since the previous government's term ended in May, the UPA government had rolled out an interim budget only till the time the new administration is installed.

The RBI will also be reviewing its monetary policy on Tuesday which will be its first exercise after the installation of the new union government. It is likely to keep the rates unchanged. Known for the primacy he accords to controlling inflation, Rajan on Friday said that the "government and the central bank have both stressed on the need to bring down inflation while respecting the fact that growth is very weak".

9:40 am Auto sales: Country's largest two-wheeler maker Hero MotoCorp today reported a 8 per cent increase in its total sales at 6,02,481 units in May 2014. It had sold 5,57,890 units in the same month last year, Hero MotoCorp said in a statement.

"The year has started well with record-breaking sales in both April and May. The demand momentum is thanks to theregular summer surge as also to the recent new launches from Hero.

9:30 am Big buzzing: Shares of L&T jumped 6 percent, hitting record high at Rs 1649 per share intraday on Monday. Investors are hurriedly buying its shares as the engineering and construction major reported profit after tax of Rs 2,723 crore (beating street estimates) in the quarter ended March 2014, up 69 percent year-on-year. Gains on divestment of part stake in a subsidiary company and other income drove earnings but finance and tax costs capped profitability.

The company recorded an exceptional gain of Rs 484.1 crore during the quarter on divestment of stake in subsidiary L&T Finance Holdings through offer for sale route.

Most brokerages are highly impressed by its performance in the last quarter and have revised target.

CLSA retains buy rating on the stock with a target price of Rs 1770 per share. The brokerage says stake sale in infrastructure arm IDPL and listing of REIT (real estate investment trust) are its near-term triggers.

The market has opened on a higher note. The Sensex is up 161.85 points at 24379.19 the Nifty up 34.10 points at 7264.05. About 564 shares have advanced, 153 shares declined, and 13 shares are unchanged.

L&T is up 6 percent while BHEL, NTPC, GAIL and Infosys are top gainers in the Sensex. Among the losers are Bajaj Auto, ITC, TCS, M&M and Sesa Sterlite.

The  rupee slipped in early trade only. It opened lower by 18 paise at 59.27 per dollar versus Friday's closing value of 59.09 a dollar. The dollar edged up slightly in early Asian trade, while the euro came under pressure as the market braced for further stimulus measures from the European Central Bank this week.

According to UBS, "The rupee is expected to rally to 55/dollar on reforms boost by new Government. India's growth story to remain strong and rupee appreciation will lead to lower inflation, lesser ambiguity."

"At 55/ dollar, there will be no diesel under recovery and hence diesel subsidy will be nil," it added.

The US markets closed mixed on Friday, while Dow and S&P hit record highs and Nasdaq closed in the red.

Financial markets in China, Hong Kong and Taiwan are shut Monday for the Dragon Boat Festival. China's factory activity expanded at its fastest pace in five months in May.  It was Nikkei's first monthly gain in five months for the month of May. It has resumed its winning streak and is sitting at a 8 week high after data showed that domestic companies raised their capital expenditure by an annual 7.4 percent in the January-March period

Manufacturing activity in Korea fell to a nine-month low while exports fell to an eight-month low last month.

In commodities, Brent prices are in a range bound trade, supported by energy supply concerns as fighting continued in eastern Ukraine.

Gold plummets to its lowest in nearly four months as a string of record closes on stock markets and softening demand in Asia weighed on prices.