Bengaluru: The BSE Sensex on Friday looked set to close the year strongly with investors upbeat about 2011 as well, but high inflation and the health of the U.S. and European economies will be key concerns.

The main 30-share main BSE index has climbed more than 17 per cent so far this year, on the back of record foreign fund inflows of $28.7 billion.

Most investors are optimistic that a robust growth outlook for the Indian economy will make it an attractive investment option for foreign funds.

"Foreign fund flows will continue in 2011. They are seeking relative growth and that will only come from the emerging economies like India," said Ambareesh Baliga, vice president at Karvy Stock Broking.

"Since India is set to grow at a higher pace than the rest of the world, fund flows will happen."

However, several factors including high inflation and the fallout of the recent scams and its effect on the government, were likely to weigh on the market for the first six months at least, he added.

By 12:56 p.m. (0726 GMT), the main BSE index was up 0.7 per cent, or 145 points, at 20,533.29 points, with 25 of its components rising.

Hindustan Copper fell over 18 per cent to a low of 290 rupees early on Friday after the Economic Times daily said the company's share sale may be priced at a steep discount to the stock's Thursday closing price of 355 rupees.

The floor price for the issue was likely to be 100 rupees a share, the report added.

Hindustan Copper's $1.6 billion follow-on offer is part of India's ongoing divestment programme to sell stakes in some 60 firms over the next few years.

State Bank of India was up 1.6 percent after the country's top lender said on Thursday it was planning to raise 100 billion rupees ($2.2 billion) via Tier II bonds in fiscal years 2011 and 2012.

Anil Ambani group firms, led by India's No.2 mobile carrier Reliance Communications, were up on what dealers said was the billionaire's decision to rebrand the group's corporate logo by dropping his name from it and keeping only Reliance.

Dealers speculated the rebranding could lead to closer ties between him and brother Mukesh Ambani.

Reliance Communications was up over four per cent, while Reliance Infrastructure was up 2.8 per cent.

Aluminium and copper producer Hindalco Industries gained 0.3 per cent global copper prices hit record highs.

Tata Steel was up 1.7 per cent.

Export-driven software outsourcers were under pressure as the Indian rupee scaled 3-week highs, buoyed by broad losses in the dollar. Infosys fell 0.4 per cent, while Tata Consultancy was almost unchanged and Wipro was up 0.1 per cent.

Energy major Reliance Industries, which has the heaviest weight on the main index, rose 1.3 per cent to 1,064 rupees.

In the broader market, gainers were ahead of losers in the ratio 2.6 to 1, with about 182 million shares changing hands.

The 50-share NSE index was up 0.7 percent at 6,142.55 points.

The MSCI's measure of Asian markets other than Japan was up 0.3 per cent, with many of the region's markets closed ahead of the New Year holiday.

STOCKS ON THE MOVE

* JSW Energy rose over 5 percent to 99.90 rupees after it commissioned the second 300 MW unit of a 1,200 megawatt power project at Jaigad in Ratnagiri in Maharashtra state.

* Reliance Broadcast Network rose to its daily upper limit of 5 percent on an Economic Times' report Citigroup and Goldman Sachs plan to buy about 5 percent stake in the company for 350 million rupees ($7.8 million).

MAIN TOP THREE BY VOLUME

* Alok Industries on 5.8 million shares

* Suzlon Energy on 2.4 million shares

* Punjab & Sind Bank on 2.3 million shares