India's blue-chip equities finished higher Tuesday, extending the gains to the second consecutive session, as fund investors ignored the monsoon jitters and picked up heavyweight stocks at attractive levels.

Dealers said that the stock market opened for the day with a small negative gap on fears that the crucial monsoon rains would be lower than expected in the current year, dragging the overall economic growth lower.

The market index kept moving within a close range for better part of the trading session in the absence of fresh institutional buying interests before inching higher towards the end of the trade.

The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 6,860.18, representing a gain of 27.50 points or 0.40 percent over its previous session's close.

"The stock market rally is mainly being driven by sharply higher liquidity," said an analyst with a domestic brokerage firm.

"Both domestic as well as overseas buyers were putting money in heavyweight equities on hopes that the key index would cross the all-time high level of 6,700 soon," said an analyst with a domestic brokerage firm.

"There is, however, some concern in the minds of investors about the delay in the progress of crucial monsoon rains across the country. This may act as a negative trigger in the short-term," added the analyst.

The June-September monsoon rains are very crucial for the Indian agricultural sector, which accounts for one-fourth of the country's total economic output and provides employment to nearly 70 percent of the population.

India's economy grew by 6.9 percent in the fiscal ended March 31 on top of a higher increase of 8.5 percent over the previous year in the agriculture sector.

Lower than expected monsoon rains may pull down India's economic growth to six percent in the current fiscal ending March 31, 2006, according to a leading think tank.

According to the Centre for Monitoring Indian Economy (CMIE), a drop in the agriculture output will pull down the growth to six percent from an earlier projected 6.6 percent in the current fiscal year.

In the old economy sector, shares of Reliance Industries, a leading refiner and petrochemicals maker, gained nearly one percent to touch Rs.574.65 and private sector banking major ICICI Bank rose 1.4 percent to Rs.430.