Infosys Technologies' scrip closed higher on domestic bourses today while Capgemini shares were trading nearly one per cent up on NYSE-Euronext amid reports the Indian company planned to buy stake in Europe's largest IT consultancy firm.

Shares of Infosys [Get Quote], India's second-biggest software exporter, rose 2.54 per cent in intra-day trading, but ended with a modest gain of 0.17 per cent from yesterday's close of Rs 1,925.90. The scrip touched a high of Rs 1,975 but pared gains to settle at Rs 1,929.20 on the Bombay Stock Exchange.

The shares of Paris-based Capgemini jumped 0.96 per cent on NYSE-Euronext exchange to 54.30 euro in intra-day trading.

Yesterday, its scrip had surged 4.6 per cent on Paris bourse.

Infosys will announce its first quarter result on July 11 and it is expected a clear picture could emerge at that time.

A spokesperson of Infosys said the company does not comment on "market rumours". A query sent to Capgemini spokesperson went unanswered.

"Shares of Infosys are likely to do well on hopes it will bid for Capgemini, the French stalwart in consulting. Infosys has been sitting on a huge mound of cash and the markets will be glad to see this being put to good use," brokerage firm Anagram Finance said in a note.

Capgemini, which generates more than three times the sales of Infosys, would help the Bangalore-based firm narrow the gap with larger rivals such as IBM, a BSE broker said.

The French firm has a market value of euro 7.7 billion ($10.4 billion) compared to Infosys' about $27 billion. Capgemini has a turnover of about Rs 42,350 crore (Rs 423.5 billion) in 2006 as against Infosys' Rs 12,699 crore (Rs 126.99 billion) in 2006-07. But net profit of Infosys was Rs 3,845 crore (Rs 38.45 billion) in 2006-07, nearly double that of Capgemini.

Another broker said if such a deal happens, it would make strategic sense for Infosys, which does not have a strong consulting outfit, and is looking to plug that gap.

Infosys, which has Rs 6,000 crore (Rs 60 billion) on its balance sheet, has been struggling to make its consulting practice a strong service offering, for which it acquired an Australian company few years ago. Analysts said the margins in consulting were much higher than vanilla IT services.

According to Annual Report of Infosys, the company will look at acquisitions as a means to break into new markets.

The market was also abuzz with rumours if not a takeover, there could be a partnership in the outsourcing space as both the companies have aggressive plans for their BPO business.