Sensex may touch 2-½ year high

MUMBAI: Indian shares were hovering near 2-½ year highs on Tuesday, trading 0.1 percent higher tracking small gains in Asian stocks, with ICICI Bank leading the rise.

Top private lender ICICI Bank extended gains and was up 2.1 percent at 959.10 rupees, having risen 3.9 percent on Monday following an in-line 17-percent rise in quarterly net profit and a 15-percent credit growth forecast in the year to March 2011.

By 10:49 a.m. (0510 GMT), the 30-share BSE Index was trading up 0.08 percent at 18,096.16 points, with 14 of its components gaining. The benchmark index, which has gained 3.6 percent year to date, is 0.9 percent shy of touching its highest level since February 2008.

"Valuations are looking expensive. There are a lot of hopes built in. But, that said there is strong faith in long-term India story," said Nilesh Doshi, president of equities at Techno Shares. "Earnings have been a mixed bag. But, the companies which did not post a good report card are not being punished by investors."

Foreign funds have invested a net of $10.5 billion in Indian equities so far in the year, with a fraction of this absorbed by primary market offerings. SKS Microfinance's $353 million initial public offering was 13.55 times covered late Monday, as investors bet on its business model of lending to poorer borrowers in Asia's third-largest economy.

Energy giant Reliance Industries, which has the highest weight on the main index, climbed 0.9 percent to 1,024 rupees. Top motorcycle maker Hero Honda raced 0.6 percent after its July sales rose 16.6 percent.

Maruti Suzuki was up 0.5 percent as the leading car maker raised prices across models by 1 percent to 1.5 percent citing a sharp rise in input costs.

Aluminium maker Hindalco was down 0.3 percent ahead of its quarterly earnings announcement later in the day. Jaiprakash Associates firmed 1.5 percent after its cement shipments in July jumped 60.5 percent while no. 2 cement producer ACC shed 0.6 percent as its cement shipments fell 12.4 percent last month.

In the broader market, gainers led declining shares in a ratio of 1.5:1 while 115 million shares changed hands on the BSE. The 50-share NSE index was up 0.1 percent at 5,436.30 points.

NMDC Ltd rose 2.3 percent to 268.40 rupees, after the state-run miner said late Monday its net profit for the June quarter nearly doubled to 15.04 billion rupees.

Oil explorer Cairn India rose 0.5 percent to 341.95 rupees, as oil prices climbed towards $82 per barrel.