Indian shares rose 1.38 percent Thursday as overseas funds stepped up purchases of benchmark index stocks, dealers said. The Mumbai Stock Exchange's 30-share benchmark Sensex index rose 89.91 points, crossing the 6,600 level to close at 6,619.97. The Indian markets have now risen 7.41 percent or 456.9 points over the past week, backed by fresh foreign fund buying. Foreign institutional investors have made net investments of 491.4 million dollars in 2005 compared with 695.7 million dollars a year ago.

Of the 30 Sensex stocks, 29 stocks gained and one fell in trading volume of 24.2 billion rupees.

"Foreign fund buying was seen across Sensex heavyweights and mid-sized companies. This is the beginning of the pre-budget rally," said Atul Hatwar, dealer with Crosseas Securities.

Much of the nervousness seen last week has vanished as foreign funds have started buying aggressively, dealers said. "It is, however, unclear whether this is a long-term rally," said a technical analyst with brokerage ULJK Securities.

Steel, cement and refinery stocks were in the limelight as funds and operators bought across the board.

The Tata Steel closed 3.18 percent up or 12.2 rupees at 395.85 while Reliance Industries stock gained 1.36 percent or 7.25 rupees to 541.1 rupees.

Cement giant Associated Cement Companies rose 2.73 percent or 9.65 rupees to 363.3 amid expectations that India's rapidly growing economy will fuel demand for building materials.

Copyright Agence France-Presse, 2005