April 1 (Bloomberg) -- Indian stocks rose, with the benchmark index gaining for a second day on speculation overseas investors stepped up purchases because they expect stimulus measures to revive the global economy.

Reliance Industries Ltd., the nation’s most valuable company, added 3.7 percent. Infosys Technologies Ltd., the second-largest software developer, added 3.8 percent. Stocks also advanced as Goldman, Sachs & Co. upgraded its India recommendation after valuations fell below Asian levels.

“We are seeing a liquidity-driven rally,” said Jayesh Shroff, who helps manage $5.5 billion in assets at SBI Asset Management Co. in Mumbai. “Globally, investors are flush with liquidity and with the sentiment improving, they are investing some of that.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, added 193.49, or 2 percent, to 9,901.99. The S&P CNX Nifty Index on the National Stock Exchange climbed 1.3 percent to 3,060.35. The BSE 200 Index rose 1.7 percent to 1,160.06. Nifty futures for April delivery climbed 1.8 percent to 3,069.

India was raised to “market weight,” the first upgrade since the brokerage rated it “underweight” in January 2008, when the benchmark index climbed to a record, Goldman Sachs analysts led by Kathy Matsui and Timothy Moe said today.

The brokerage said India has “a higher proportion of domestic demand drivers than many other Asian economies,” while it expects “relatively better corporate profit growth than in most other markets.”

Reliance, Infosys

Reliance rose 3.7 percent to 1,581.25 rupees. Infosys gained 3.8 percent to 1,373.75 rupees. Housing Development Finance Corp., India’s biggest mortgage provider, climbed 6.6 percent to 1,505.80 rupees. Reliance Infrastructure Ltd., India’s third-largest utility, jumped 6.7 percent to 550 rupees.

Tata Power Ltd., India’s biggest electricity generator outside state control, rose after BNP Paribas Group raised the stock’s rating, saying concerns about its ability to service debt were overdone.

Tata Power advanced 3.3 percent to 793.70 rupees. The stock had its rating raised to “buy” from “hold” at BNP Paribas and its target price increased by 13 percent to 933 rupees.

“We believe that the company can comfortably service debt on power projects if we assume lower interest rates and still retain our assumption of equal annual repayment of principal,” Girish Nair, an analyst at BNP Paribas said in a note to clients today.

Overseas investors sold a net 4.65 billion rupees ($91.3 million) of Indian stocks on March 30, according to the nation’s market regulator.

The following shares were among the most active on the exchange:

Cipla Ltd. (CIPLA IN) fell 0.6 percent to 218.75 rupees. The Indian drugmaker had its stock rating cut to “neutral” from “buy” by Nomura Financial Advisory & Securities India Pvt.

Plethico Pharmaceuticals Ltd. (PLEP IN) dropped 7.1 percent to 99.10 rupees. The Indian drugmaker posted a loss of 431.3 million rupees in the quarter ended Dec. 31 on currency declines. The company made a provision for 682.5 million rupees owing to exchange losses in the quarter on outstanding foreign currency convertible bonds at the prevailing market rate.

Sun Pharmaceutical Industries Ltd. (SUNP IN), the nation’s most valuable drugmaker, dropped 4.1 percent to 1,065.45 rupees after a U.S. unit said it recalled generic heart tablets. Caraco Pharmaceutical Laboratories Ltd. yesterday said the tablets may contain the wrong amount of medicine. The voluntary recall covers 0.125 milligram and 0.25 milligram digoxin tablets, the Chicago-based company said.

Suzlon Energy Ltd. (SUEL IN) added 9.9 percent to 46.55 rupees. India’s biggest maker of wind-turbine generators has cut the price of convertible bonds worth $500 million, NDTV Profit network reported yesterday, without citing anyone. The company will pay holders 30 percent less while converting the debt to shares, the news channel reported.

Wockhardt Ltd. (WPL IN) dropped 11 percent to 75.65 rupees. The Indian drugmaker that targeted sales of $1 billion in 2009 sought to restructure debt, citing liquidity constraints and adverse market conditions. The company has approached the Corporate Debt Restructuring Cell through ICICI Bank Ltd., the drugmaker said in a statement yesterday. It also delayed the announcement of earnings, which was scheduled for yesterday.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

Last Updated: April 1, 2009 06:49 EDT