In a good start to the new year, buying in banks, metal and auto stocks on US Senate approving a bill to avoid the so-called 'fiscal cliff' helped BSE benchmark Sensex today rise by 154 points to 20-month high.
Driven by all-round optimism, the 30-share index rose by 154.10 points, or 0.79 per cent, to end at 19,580.81. This was its highest closing since 19,602.2 on April 21, 2011.
Strong gains in ICICI Bank, SBI, L&T, HDFC Bank, Tata Steel and Tata Motors were supported by heavyweights, including HDFC, ITC, RIL and TCS. Of the 30 scrips in the BSE Sensex, 27 gained and just three declined.
Similarly, the 50-share National Stock Exchange index Nifty, which swung between 5,963.90 and 5,935.20, settled with a gain of 45.75 points, or 0.77 per cent, at nearly two-year high of 5,950.85. This is its highest closing since January 6, 2011 when NSE Nifty settled at 6,048.25.
The US Senate overwhelmingly approved a legislation to avoid the so-called fiscal cliff in the wee hours of Tuesday, with 89 voting in favour and 8 against. The proposal would extend tax rates on annual household income under USD 4,50,000 and postpone automatic spending cuts for two months.
Buying in domestic markets was across-the-board as all 13 sectoral indices closed higher with realty, metal, banking and capital goods taking the lead. Overall, 1,930 stocks gained, helping investor wealth shoot up by Rs 64,000 crore to Rs 69.85 lakh crore.
"Retail investors accumulated stocks of metal and interest-sensitive financial sector stocks", said Manoj Choraria, a Delhi-based stock broker.
Besides, expectations of a rate cut by the Reserve Bank of India later this month, triggered buying activity, traders said.
Most of the Asian and European markets were closed today for the New Year's Day holiday. Wall Street will also remain closed today.
Yesterday, the Dow Jones Average (1.28 pc) and the Nasdaq Composite Index (2.02 pc) settled with marked gains.
Kishor Ostwal, CMD, CNI Research Ltd. said, "At the beginning of 2012, there was absolute fear on the street and only advice coming from every nook and corner was to stay away as pain in Eurozone, corruption and policy paralysis in India. However, market surprised every one by rising 25 pct and over USD 24 billion (FII) inflow."
"In 2013, we expect government to push reforms and possible turn of interest rate cycle. With Sensex riding near all-time high, there will be at least 10-15 per cent premium assigned to