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Sensex Posts Biggest 2-Day Gain in Three Months

mumbai - Indian stocks rose, with the benchmark index posting its biggest two-day gain in three months, after US and European governments agreed to buy stakes in their banks to re-energize credit markets and avert recession.

Satyam Computer Services Ltd., which derives more than half its sales from the US, rose 8.3 per centper cent, after the Bush administration said it would provide $125 billion to buy shares in American banks.

ICICI Bank Limited, India’s second-largest lender, added 5.7 per cent after India’s central bank said it will hold an extra 14-day money auction on Tuesday to boost cash in the financial system.

“To show solvency of banks it was important for governments to buy stakes in banks as it will evoke trust and help stem the panic,” said Ajay Bodke, who helps manage the equivalent of $872 million of stocks at IDFC Mutual Fund in Mumbai.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 174.31, or 1.5 per cent, to 11,483.40, extending Monday’s 7.4 per cent advance. The gauge gained 9 per cent from Monday through Tuesday, the biggest two-day gain since the period ended July 18. The S&P CNX Nifty Index on the National Stock Exchange climbed 27.95, or 0.8 per cent, to 3,518.65. The BSE 200 Index rose 1.5 per cent to 1,359.12.

The Bush administration will invest about $125 billion in nine banks including Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley. -