The Indian equity markets entered 2013 with a good start as investors ignored the gloomy domestic economic scene and cheered the temporary resolution the US lawmakers managed to arrive at for the fiscal cliff situation there.
The Sensex closed at 19580.81, up 0.79 percent and the Nifty closed at 5951, up 0.77 percent.
The US Senate on Tuesday, two hours after a December 31 deadline had lapsed, approved legislation aimed at averting the 'fiscal cliff' by stopping most tax hikes and across-the-board spending cuts that were due to begin with the new year.
Traders said gains track optimism after Wall Street rallied on Monday as US lawmakers closed in on a deal to avoid a budget crisis that many fear could cripple the world economy in 2013.
But in India, things are not as rosy. Finance Minister P Chidambaram is dangling dangerously from the two cliffs—the current account deficit (CAD), which is the difference between what the country earns and spends abroad, and the fiscal deficit, the gap between what the government spends and earns back home.
Private banks such as ICICI Bank closed up 2 percent and HDFC Bank 0.82 percent on hopes of a rate cut by the RBI by January end. SBI rose 1.77 percent.
Stocks in news
SpiceJet closed up 3 percent after the company said it has raised Rs 126.5 crore through issue of securities to promoter Kalanithi Maran.
Jet Airways closed up 3.35 percent after buzz that Etihad board is likely to meet next week to firm up its investment plans in India. The board will consider proposal of both cash-trapped airlines Jet Airways and Kingfisher Airlines, according to CNBC TV18 report.
Jindal Steel and Power closed up 3.26 percent after reports that the company hiked product prices.
Kingfisher Airlines extended losses and closed down 3 percent.