Sensex up for 5 weeks in row, best in 2008

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Sensex surges by over 464 ptsBank stocks wilt, ICICI Bank down 10 pctBank stocks wilt, ICICI Bank down 10 pctSensex down 323 pts, dips to 3-year low

Indian shares rallied late on Friday to their highest close in almost eight weeks, but trade was choppy after inflation topped 12 per cent for the first time in 13 years and raised more monetary tightening worries.

The main index rose 0.3 per cent and notched a fifth weekly gain in a row, registering its best run this year.

But traders said the outlook was uncertain and would depend upon global factors such as oil prices, credit crisis fallout and US economic woes.

"Market drew comfort from cooling oil prices and staged an upward move towards close but concerns on inflation still remain," K K Mital, head of portfolio management Services at Globe Capital, said.

The 30-share BSE index rose 0.33 per cent, or 50.57 points, to 15,167.82, with half its components gaining. It firmed 3.5 per cent in the week but is down a quarter in 2008.

The benchmark spent most of the day in negative territory, falling as low as 14,888.12 at one stage after analysts said late on Thursday inflation was yet to peak and the central bank was not done with monetary tightening as the wholesale price index rose 12.01 per cent in the 12 months to July 26.

Traders said the market got a boost after oil fell below $118 a barrel, easing the threat of further rate hikes immediately. No. 2 lender ICICI Bank rose 2.9 per cent to 728.90 rupees taking gains in the week to 13.5 per cent.

HDFC Bank climbed 2.1 per cent to 1,280.20 and the sector index climbed 1.5 per cent.

But shares in software services companies fell on concerns of weaker outsourcing prospects in the United States, their biggest market, after insurer American International Group posted a big loss.

Bellwether Infosys Technologies fell 2.4 per cent to 1,679.85 rupees and No. 4 Satyam Computer Services dropped 1.8 per cent to 409 rupees.

Shares in state-run explorer Oil and Natural Gas Corp rose 4 per cent to 1,064 rupees, to its highest close since March 28. It along with state-run gas transporter GAIL has been taking up about a third of the subsidy burden. In the broader market, losers led gainers 1,408 to 1,317 on volume of 339 million shares.

Brokerage India Infoline advised clients to remain cautious, as the choppiness indicated the market was uncertain over the near-term direction.

The broader 50-share NSE index rose 0.12 per cent to 4,529.50.