Sensex closes off day's high; M&A target banks rally

Key equity benchmarks closed firm, but off day's highs on Wednesday, as the passage of the Banking Amendment Bill lifted sentiment.

The 30-share Sensex closed at 19,476, up 111.25 points after touching a high of 19,516.02 earlier in the session. The 50-share Nifty closed at 5,929.60, up 32.80 points after hitting 5,939.40 intra-day.

Private banks 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%. Barring these exceptions, investors were not too excited about the sector in general as the widely held view is that much of the positives from the amended rules have already been priced in.

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. M&M Financial Services was an exception to the trend, gaining over 2%. Brokers said the run up in these stocks over the last few weeks had made most of them expensive.

Sectorwise, auto, healthcare and metal shares did well. Investors shunned shares from the FMCG and capital goods sectors.

The BSE benchmark Sensex ruled firm in late morning trade today by surging 98 points on persistent buying in auto, metal, consumer durable and refinery sectors on hopes of easing of monetary policy by RBI next month.

Sustained foreign capital inflows coupled with higher global advices boosted the market sentiment.

Banking stocks edged higher after the Lok Sabha yesterday passed the Banking Laws (Amendment) Bill, 2011, paving the way for overhaul of the banking sector.

Foreign institutional investors (FIIs) bought shares worth a net Rs 922.37 crore yesterday, as per provisional data from the stock exchanges.

The BSE-30 index, Sensex, opened higher at 19,429.91 and firmed up further to 19,516.02 before quoting 19,462.39 at 1030 hrs. It showed a 97.64 points gain or 0.50 per cent from its last close.

The NSE 50-share index Nifty also moved up by 27.80 points, or 0.47 per cent, to 5,924.60 at 1030 hrs.

Asian stocks were mostly higher in early trade yesterday with investors taking heart from fresh signs of progress on a compromise solution to avert the fiscal cliff of tax hikes and spending cuts due to take place next year in the world's biggest economy.

Key benchmark indices in China, Hong Kong and Taiwan were up by 0.02 to 0.71 per cent while stocks in Indonesia and Singapore were down 0.44 to 0.18 per cent.

Japanese stocks extended this week's gains as the Nikkei 225 average was up 1.68 per cent.

The BSE benchmark Sensex extended gain for the second straight day by adding nearly 122 points in early trade on sustained buying on optimism of RBI easing monetary policy next month amid a firming global trend.

The 30-share barometer rose by 121.82 points, or 0.63 per cent, to 19,486.57 with all sectoral indices led by auto and metal stocks leading the rise.

The wide-based National Stock Exchange index Nifty traded above crucial 5,900 level higher by gaining 34.15 points, or 0.58 per cent, to 5,930.95.

Brokers said the sentiment remained firm on sustained buying by funds and retail investors on optimism of RBI easing monetary policy next month.

They said a firming trend in the Asian region, tracking overnight Wall Street's gains where optimism was growing that a deal to avert the fiscal cliff was in sight also influenced the sentiment.

In the Asian region, Hong Kong's Hang Seng rose by 0.71 percent, while the Japan's Nikkei by 1.01 percent in early trade today. The US Dow Jones Industrial Average ended 0.87percent higher yesterday.