8:15AM Rio Tinto agreed to buy Alcan for $38.1 billion.

Rio Tinto announced an agreement Thursday to buy Canadian aluminum producer Alcan (AL: chart) in a deal worth $38.1 billion, or $101 a share, entirely in cash. The offer exceeds a hostile bid from U.S. aluminum giant Alcoa (AA: chart) by roughly a third. The transaction represents a 65.5% premium to Alcan''s all-time high prior to the Alcoa offer. It''s a premium of 32.8% to Alcoa''s current cash-and-shares offer valued at $76.03 per Alcan share.

Rio Tinto’s CEO Tom Albanese said the company is making the deal in order to take strong positions in three metals-iron ore, copper and aluminum. It is aiming to meet the great demand from China''s fast growing economy.

The board of Alcan unanimously approved of the offer from the Anglo-Australian mining company. Alcan shares surged 12% in pre-market trading, while Alcoa shares gained 5.7%.

7:30AM NY – 6:30PM Mumbai Sensex advances 181 points, Hindalco and Reliance Energy rally, IT shares dip.

The Sensex on BSE finished 181.42 points higher Thursday, or 1.22%, at 15,092.04.

The Sensex opened 53 points higher and trading was steady throughout the session. The benchmark index advanced to an intra-day high of 15,112.22 by late afternoon, and traded within a range of 148 points. Trading was not characterized by any volatility.

The market-breadth was very strong as there were two advancers for each decliner. From 2,713 stocks that were traded on the market 1,793 stocks advanced, 858 declined and 62 were unchanged. Of the 30 stocks in the Sensex, 25 advanced, while the rest declined.

The turnover on BSE soared to Rs 6,080 crore, much higher Rs 5,496 crore on Wednesday. On NSE, the turnover was Rs 12,882 crore, also higher than Rs 11,183 crore on Wednesday.

Economic news

Industrial production in India slowed its growth in May on higher interest rates which hurt demand, while the strong rupee impacted exports negatively. Industrial production advanced 11% from a year earlier, which is lower compared with the revised 12.4% rise in April and also missed analysts’ expectations for an increase of 12%.

Most Active

GMR Infrastructure was the most active stock with a turnover of Rs 454 crore followed by DLF and Time Technoplast.

Advancers of the Day

Aluminium and copper large-cap Hindalco Industries surged 7% to Rs 166 on hopes of consolidation of global aluminum industry. Other metal stocks also advanced following the purchase of Alcan by Rio Tinto for $30 billion, suggesting further consolidation in the sector. Tata Steel gained 2.6% to Rs 672, Sterlite Industries was up 5.4% to Rs 643, and Sail added 4.7% to Rs 144.

Reliance Energy gained nearly 7% to Rs 668 as the company plans to invest Rs 60,000 crore to add 15,000 MW of power over the next five years which will improve the company’s generation capacity almost 17 times from 941 MW now.

BHEL ended up over 4% to Rs 1,641. Auto makers also rallied on fresh buying. Maruti Udyog advanced 2.7% to Rs 828, Tata Motors was up 1% to Rs 740 and Mahindra & Mahindra rallied 2.9% to Rs 803. Motorcycle producer Bajaj Auto advanced 3.1% to Rs 2,195.

Banks gained on the belief that there would be no interest rate hikes in the near future. State Bank of India advanced 1% to Rs 1,557, while private sector banks ICICI Bank gained 1.3% to Rs 967 and HDFC Bank surged 4.4% to Rs 1,201.

Decliners of the Day

Ambuja Cements led the decliners, down 1.2% to Rs 126, while ONGC lost almost 1% to Rs 893. IT large-caps underperformed with Infosys 0.4% lower to Rs 1,922 and Satyam dipped 0.3% to Rs 480. Larsen & Toubro was almost flat and finished at Rs 2,377.