By Abhishek Vishnoi
MUMBAI (Reuters) - The BSE Sensex rose more than 1 percent on Tuesday to their highest close in three months as expectations for continued foreign buying, as part of a powerful rally in global equities, lifted blue chips such as ITC.
Global shares hit their highest level in almost five years on Tuesday, a day after the S&P 500 closed at another record high, on continued optimism over last week's strong U.S. jobs report. Japan's Nikkei average jumped 3.6 percent to its highest in nearly five years.
Hopes of foreign inflows and government efforts to revive the economy are supporting markets after the Reserve Bank of India cut interest rates for a third time this year, although it signalled little room for further policy easing.
Foreign funds have bought a net $680 million of Indian stocks in the three sessions to May 3, taking the 2013 net buying to a total of $12.17 billion, regulatory data shows.
"Worldwide economies are reviving due to quantitative easing and countries like India should continue to benefit from portfolio flows in the medium term," said R.K. Gupta, managing director at Taurus Mutual Fund.
The BSE Sensex rose 1.09 percent, or 215.31 points, to end at 19,888.95, its highest close since January 31.
The Nifty rose 1.21 percent, or 72.50 points, to end at 6,043.55, closing above the psychologically important 6,000 level, posting its highest close since January 30.
Among blue chip stocks, ITC Ltd (ITC.NS) gained 2.8 percent, while Tata Motors Ltd (TAMO.NS) rose 2.5 percent.
Private sector lenders also gained, with ICICI Bank Ltd (ICBK.NS) and HDFC Bank Ltd (HDBK.NS) rising 1.9 percent each.
DLF Ltd (DLF.NS) rose 2.9 percent on its plans to sell up to 81 million shares through an institutional placement. The price range and size are yet to be determined, according to the term sheet seen by Reuters.
Sintex Industries Ltd (SNTX.NS) shares rose 4.8 percent after its January-March profit surged 65.5 percent from a year earlier.
Aban Offshore Ltd (ABAN.NS) rose 3.5 percent after signing a contract to deploy a jack-up rig, with an estimated revenue of about 8.28 billion rupees.
Among stocks that fell, Ranbaxy Laboratories Ltd (RANB.NS) closed 0.3 percent lower, a day before its March quarter earnings.
StarMine's SmartEstimates, which places greater emphasis on forecasts by top-rated analysts, expects Ranbaxy to report a profit of 1.56 billion rupees for the quarter, higher than the wider consensus mean estimate of 1.41 billion rupees.
(Editing by Anupama Dwivedi)