Mumbai: Oil public sector undertakings (PSU) stocks opened with a wide upside gap and the SENSEX started off better in line with a mild rally in select shares at early stages on the Bombay Stock Exchange (BSE) on October 7 on fresh buying interest.

HPCL and BPCL hogged the limelight and rallied sharply leading other PSU stocks to gains remarkably on buying prompted reports that the government was in the process of breaking the impasse over disinvestment in oil PSUs and that a compromising proposal has been worked out for the clearance of the strategic sale of HPCL and BPCL.

HPCL and BPCL were quoted higher by more than 11 per cent leading to a rally in Indian Oil Corp, Shipping Corp, Kochi Refinery and other PSU stocks.

However, other key stocks witnessed cautious movements in view of a host of negative developments including threat of a US strike against Iraq, which has sent global markets reeling down in the past several sessions.

The BSE sensitive index opened moderately higher at 2939.18 as against previous close of 2930.51 and later rallied to a high of 2949.18 before being quoted at 2939.54 at 10:30 hours (IST).

The sentiment was also aided by Prime Minister Atal Behari Vajpayee's announcement that hard decisions including privatisation of public sector undertakings will be taken as part of tough reform measures to achieve 8 per cent annual growth during the Tenth Plan.

PTI