INDIA STOCKS-Indian shares rise as autos lead rally on strong sales data; ITC caps gains

Updates for morning trade

By Bharath Rajeswaran and Vivek Kumar M

Jan 2 (Reuters) - India's equity benchmarks advanced on Friday in a broad-based rally led by automobile stocks on positive monthly sales data, while losses in cigarette maker ITC after a new tax on the sector capped gains.

The Nifty 50 index .NSEI rose 0.38% to 26,245.70, while the BSE Sensex index .BSESN added 0.39% to 85,521.25, as of 10:28 a.m. IST.

Fifteen of the 16 major sectors logged gains. Auto index .NIFTYAUTO advanced 0.9%, led by Hero MotoCorp HROM.NS, up 2.5%, and TVS Motor TVSM.NS rising 2% on robust December sales numbers.

ITC ITC.NS, maker of Gold Flake and the market leader, fell 3.6% after losing 9.7% on Thursday, as multiple brokerages projected earnings pressure from the cigarette tax hike. The stock dragged the fast-moving consumer goods index .NIFTYFMCG 1.1% lower.

Metal index .NIFTYMET rose 1%, tracking an uptick in global metal prices on a weaker U.S. dollar and top consumer China reporting stronger industrial activity. MET/L

The broader small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 rose about 0.6% and 0.7%, respectively.

"The monthly sales data from auto companies as well as business updates from other sectors signal a likely improvement in December quarter earnings, lifting markets...," said G Chokkalingam, founder and head of research at Mumbai-based Equinomics Research.

A positive earnings season, followed by a favourable union budget and a potential trade agreement with the U.S., will act as the triggers to lift markets higher after the consolidation in 2025, Chokkalingam added.

Devyani Industries DEVY.NS jumped 2% after the KFC and Pizza Hut operator struck a long-anticipated $934 million merger deal with peer Sapphire Foods SAPI.NS. Sapphire Foods fell 3.2%.

Punjab & Sind Bank PUNA.NS rose 2.6% after the lender's provisional total deposits for October-December rose 9.3% while gross advances jumped 15.25% year-on-year.

Indian Bank INBA.NS and South Indian Bank SIBK.NS rose 2%, each, on posting robust business updates for the December quarter.

(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Rashmi Aich)

((VivekKumar.M@thomsonreuters.com;))