The BSE Sensex climbed 1.8 percent on Tuesday, extending its gains to a second session in a row, bolstered by hopes for a revival in foreign fund inflows as global risk appetite showed signs of improving.

BSE

BSE Sensex

Bajaj Auto rose as much as 1.3 percent ahead of the unveiling of a vehicle codenamed RE60 by the country's No. 2 motorcycle maker and the top producer of motorised 3-wheeled rickshaws.

The company has been working with Nissan Motor Co (7201.T) and Renault SA (RENA.PA) on a project to develop what is said to be an ultra low-cost minicar.

Network18 Media (NEFI.NS) and TV18 Broadcast (TVEB.NS) jumped as much as 16 percent and 20 percent, respectively, after the Economic Times said a Reliance Industries (RELI.NS) unit plans to invest more than 15 billion rupees in parent group TV18.

Energy conglomerate Reliance, which has been looking to diversify into newer businesses like financial services and telecoms, was up 0.7 percent at 711.50 rupees.

The main 30-share BSE index was up 1.81 percent at 15,799.89 by 9.59 a.m. (0429 GMT), with all but one of its components rising.

Some optimism is returning on hopes of positive news flows over the next couple of weeks in terms of inflation, industrial output and quarterly earning numbers, said Dipen Shah, head of private client group research at Kotak Securities.

The near-term momentum of the market will be determined by the earnings season starting next week, with No. 2 software services exporter Infosys (INFY.NS) reporting on Jan 12, he said.

The BSE index was among the worst performers in the world in 2011, falling 24.6 percent, with foreign portfolio investors pulling out $512 million, compared with inflows of more than $29 billion in 2010.

The market was battered last year as surging inflation and interest rates dimmed the growth outlook for Asia's third-largest economy and corporate earnings. The global economic uncertainty also pushed investors away from risky assets.

Hopes for a revival in foreign inflows have risen after the government said on Sunday it would allow individual foreign investors to directly buy stocks from January 15.

Index heavyweights ICICI Bank (ICBK.NS), India's No. 2 lender, and Infosys rose 2.6 percent and 1.6 percent, respectively.

Suzlon Energy (SUZL.NS) rose 2.2 percent to 18.50 rupees after the wind turbine maker said it had won 120 MW order in the United States.

The 50-share NSE index was up 1.7 percent at 4,715.10 points. In the broader market, there were nearly five gainers for every loser on relatively light volume of 85 million shares.

STOCKS ON THE MOVE

* Religare Enterprises (RELG.NS) rose as much as 1.8 percent to 399 rupees after the financial services provider said private equity firm Jacob Ballas Ltd would invest 2 billion rupees in unit Religare Finvest.

* OCL Iron and Steel Ltd (OCLI.NS) was up 5.3 percent at 50 rupees after the company said it had acquired 100 percent stake in small steelmaker BS Ispat Ltd.

MAIN TOP 3 BY VOLUME

* IFCI (IFCI.NS) on 6.8 million shares

* Tata Motors (TAMO.NS) on 4.9 million shares

* Hindalco (HALC.NS) on 3.4 million shares