The NSE index marked its highest closing level on Monday as infrastructure-related stocks ranging from capital goods makers such as Larsen & Toubro to cement makers and power sector lenders surged on the federal budget's infrastructure push.

The 30-share BSE index Sensex closed higher by 97.64 points or 0.33 per cent at 29,459.14 and the 50-share NSE index Nifty ended up by 54.9 points or 0.62 per cent at 8,956.75.

Among BSE sectoral indices, capital goods index was the star-performer and was up 3.58 per cent, followed by healthcare 1.87 per cent, banking 1.81 per cent and power 1.46 per cent. On the other hand, FMCG index fell the most by 1.89 per cent, consumer durables 1.6 per cent, realty 0.3 per cent and auto 0.29 per cent.

Private sector banks such as Axis Bank, seen as strong beneficiaries of the government's move to make no distinction between foreign direct investment and foreign portfolio investment, surged.

The move is expected to raise India's weight in MSCI indexes, thereby soothing worries about huge India overweight positions.

Major Sensex gainers were Axis Bank 5.64%, Cipla 4.96%, BHEL 4.44%, L&T 4.34% and HUL 2.8%, while the top five losers were ITC 4.97%, Bajaj Auto 4.03%, Bharti Airtel 2.18%, Hero MotoCorp 2.16% and Tata Motors 1.6%,

A report by SMC Investments and Advisors said: “China's rate cut and more than expected manufacturing index provided a boost to Asian stocks. US markets ended the month gaining but lost on closing as global worries still weigh US recovery. The manufacturing sector is China expanded at a faster pace than originally reported in February, the latest survey from HSBC said on Monday with a revised PMI reading of 50.7. That's up from 49.7 in January, and it was even higher than last month's flash estimate of 50.1 - and it moves even further above the boom-or-bust line of 50 that separates expansion from contraction.”

European shares clung to seven-year highs on Monday, lifted by merger activity in the telecoms sector, while Asian stocks edged up after China cut interest rates at the week-end.

The pan-European FTSEurofirst 300 stocks index was up 0.1 per cent.

Asian stocks edged higher on Monday as China's week-end interest rate cut partially offset soft US data, while the dollar hit a five-week high against the euro.

China had on Saturday stepped up its easing tempo and cut its lending and deposit rates as the world's second largest economy tries to ward off deflation.

Australian shares posted some of the biggest gains in Asia following the China rate cut, gaining 0.8 per cent after touching a seven-year peak as resource shares surged.

But the impact from the week-end easing only had a limited effect on the region's overall markets.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent. Tokyo's Nikkei crawled up 0.3 per cent and Chinese and South Korean stocks also posted comparable modest gains.

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