The Sensex and the Nifty rose on Monday to mark their fourth consecutive session of gains, as lenders advanced on hopes of stable asset quality after ICICI Bank Ltd's positive outlook and a decrease in bad loans at some of the state-run banks.

The 30-share BSE index Sensex ended higher by 72.5 points or 0.26 per cent at 28,187.06 and the 50-share NSE index Nifty was up 10.2 points or 0.12 per cent at 8,543.05.

Among BSE sectoral indices, consumer durables index was the star-performer and was up 1.37 per cent, followed by banking 0.99 per cent, power and auto 0.73 per cent each. On the other hand, metal index was down 1.08 per cent, followed by IT 0.53 per cent, oil & gas 0.51 per cent and TECk 0.28 per cent.

Top five Sensex gainers were SBIN (3.94%), ICICI Bank (+3.4%), Maruti (+2.29%), Dr Reddy's (+2.00%) and BHEL (+1.58%), while the major losers were VEDL (-2.5%), M&M (-2.04%), Coal India (-1.96%), Lupin (-1.93%) and HDFC Bank (-1.49%).

The moderation in formation of new stress loans, coupled with Finance Minister Arun Jaitley's plan to infuse nearly $2 billion into state-run lenders, helped the BSE bank index gain 0.99 per cent.

ICICI Bank had said on Friday it saw the rate of new troubled loans slowing as the nation's biggest private sector lender by assets reported a better-than-expected quarterly profit.

Meanwhile, the Reserve Bank of India is expected to keep key policy rates unchanged at its policy review on Tuesday, but some investors remain hopeful that the fall in crude oil prices and slowing core sector growth may lead to a surprise cut by RBI.

"Fundamentals warrant a rate cut. India is the only one which is not cutting rates sufficiently despite a deflationary scenario in the world," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm, said.

A report by SMC Investments and Advisors said: " Asian shares dropped on Monday amid jitters about weakening Chinese manufacturing data and the continued decline in commodity prices. US stocks closed mildly lower on Friday, the final day of trade for July, as investors digested energy earnings misses and soft data that could push an initial rate hike further out. China's government has taken unprecedented steps to keep Chinese stocks afloat after their worst monthly losses in six years. Beijing has reportedly lent 1.3tn yuan ($240 billion) to Chinese Securities Finances in attempt to halt the stock market meltdown. The government intends for brokers to purchase stocks and mutual funds with the money made available from the central bank's relending facility. Markets in Beijing are especially volatile, having run up sharply before this summer's brutal correction. The Shanghai main index on Friday was more than 50 per cent below its June 8 peak. China's ruling party has promised it will do more to keep Asia's economic powerhouse from slowing down."

European shares were steady on Monday as strong results from HSBC and Commerzbank offset the impact of weak Chinese economic data, with the reopening of the Greek bourse also in focus.

The pan-European FTSEurofirst 300 index rose 0.3 per cent, while the euro zone’s blue-chip Euro STOXX 50 index was flat.

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