Sentiment upbeat: Sensex closes above 19600

Mumbai: The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 200.52, or 1.03 per cent, to 19,618.01 according to preliminary closing prices. The gauge makes an advance of 4.4 per cent for the week and marks its highest close since January 2008.

The S&P CNX Nifty Index on the National Stock Exchange rose 1.1 per cent to 5,894.15. The BSE 200 Index advanced 1.2 per cent to 2,496.52.

Ending on a positive note Friday equities, according to market observers, took cues from positive global markets with funds and retail investors taking long positions across the board. A quarter point rate hike by the country's apex bank failed to deter sentiment with investors judging economic growth to be robust enough to withstand higher borrowing costs. Market observers say a higher amount of disposable cash in hand for investors may also be responsible for the positive spike in sentiment.

The Reserve Bank of India, India's central bank, raised interest rates for a fifth time this year yesterday, saying economic growth remains ''steady.'' The central bank raised borrowing costs for the fifth time this year, boosting the repurchase rate to 6 per cent from 5.75 per cent, and the reverse-repurchase rate to 5 per cent from 4.5 per cent.

Analysts say credit demand will continue inspite of tightening as cost of capital continues to remain low.

Loans to Indian companies in 2010 have climbed 36 per cent to Rs207,630 crore ($45 billion) according to Bloomberg data, the most since 2002.