India's key share market index rallied as much as nearly three percent Friday, extending gains for the third consecutive session, with robust corporate earnings numbers enthusing investors to enlarge positions.

Dealers said the stock market opened for the day on a bullish note, after ending over one percent higher in the previous session, as institutional buying in heavyweight equities continued unabated.

The market rally gained strength in the early trade as impressive quarterly financial numbers announced by the State Bank of India, the largest commercial bank, boosted the investors' sentiment.

Institutional buying continued all through the trading session in new as well as old economy companies, propelling the benchmark stock market index to its best close over the past three weeks.

Mirroring the bullish stock market sentiment, the stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 6,419.09, netting a gain of 179.66 points or 2.88 percent over its previous close.

The National Stock Exchange index Nifty also surged on fresh buying and closed with gains of 2.73 percent to 2,008.30 points.

"The current market rally is basically being led by the corporate earnings numbers as most of the heavyweight companies have managed to better the street expectations," said Neeraj Deewan, an analyst with Quantum Securities.

"The overall macro-economic indicators and hopes of hopes of unveiling of a market-friendly financial budget also boosted the buyers' mood in the trading ring," added Deewan.

The general budget for the fiscal year 2005-06 is likely to be presented to parliament towards the end of next month. The stock market mood was also boosted by the sustained decline in the country's inflation rate.   

Analysts say the market rally may get further momentum in the days ahead after the government announced the much-awaited decision to allow pension funds to invest in the equity market.

The government said Friday, after the market closure, that it will allow pension funds to invest up to five percent of their total portfolio in equity markets.

In the old economy sector, index heavyweight State Bank of India gained as much as 7.1 percent to touch Rs.622.75 after it unveiled its impressive Oct-Dec quarterly financial numbers.

The State Bank of India said Friday its net profit in the quarter ended Dec 31, 2004 jumped a better-than-expected 20 percent on increased borrowing by the domestic industrial sector.

The bank's net profit in the Oct-Dec quarter touched Rs.10.99 billion, compared with a profit of Rs.9.2 billion in the same period a year ago. Total income rose 20 percent to Rs.102.67 billion.
 
Shares of Grasim Industries, India's largest cement maker, rose 1.8 percent to Rs.1,316.50 on fresh buying interest triggered by improved quarterly financial numbers.

Grasim Industries said Friday its quarterly profit jumped 32 percent in the third quarter ended Dec 31, 2004 to Rs.2.17 billion and net sales climbed 17 percent to Rs.15.6 billion.