The BSE Sensex rose for a second consecutive session today as the Banking Amendment Bill got approval in the Lok Sabha. The market seemed to cheer the developments and the indices settled at higher levels, led by gains in IT and banking stocks.
The BSE Sensex provisionally gained 0.48 percent, while the 50-share Nifty ended up 0.5 percent.
Private banks, which perceived as likely acquisition targets once RBI issues the final guidelines for banking license, were the star performers of the day. Federal Bank, Karnataka Bank and Dhanlaxmi Bank gained 3-6%. Banking license hopefuls like L&T Finance and Bajaj Finance began the day on an upbeat note, but gave up much of their gains towards close of trading.
Consistent buying existed among rate-sensitive sectors like Auto and Realty stocks on hopes of policy easing by the Reserve Bank of India in January monetary policy after positive undertone in Tuesday’s review supported the mood on the street.
Tata Consultancy Services was seen trading in green after Morgan Stanley upgraded the stock to ‘overweight’ from ‘equal-weight’ and raised its target price on the stock.The stock closed 1.8 percent higher.
Meanwhile, after keeping rates unchanged on Tuesday, RBI now proposes to infuse Rs.8000 crore to ease the liquidity crunch in the system by buying government securities.
Saurabh Mukherjea of Ambit Capital thinks the domestic political situation will be the biggest risk for our markets next year. In an interview with CNBC- TV18, he said Indian equities have had a decent run this year partly because of pro-reform stance of the government and partly on economic recovery in the US markets.
Going forward Mukherjea expects to see big FII reallocations towards India.
The rupee extended gains to 54.57/58 versus its previous close of 54.85/86 on the back of dollar inflows with a power sector firm
Westpac expects the rupee to enjoy a positive start to 2013 as the recent rebound in factory output, PMI data, along with equity market resilience is pointing towards a better growth environment for India through first half of 2013.
"Combined with a likely RBI rate cut in the early part of Q1 and we suspect the market will feel more comfortable in a rebound in growth," said Westpac in a note.