Sensex ends over 200 points up led by banks, oil & gas, metals

The Nifty strengthened in the second half of trade and recovered all of yesterday's losses post government's comments on P-notes and source based news on banks' consolidation. It closed above the 5,050 level while the Sensex ended above the psychological 17,000 mark. The benchmark indices witnessed consolidation in the first half of trade.

Today's rally was seen across all the sectors; oil & gas, banking, metal, technology and cement were the major gainers. However, only select stocks like Bharti Airtel, Reliance Power, Suzlon and Reliance Capital fell 1.5-3%. Maruti, Reliance Infrastructure, Unitech and HCL Tech declined around 0.5%.

Outstanding P-Note investment in India was at Rs 1.24 lakh crore as on October 31. The government said they have not taken any steps to discourage investment via P-Notes.

The government is keen on the issue of consolidation in the banking space. According to sources, the government may look to merge Dena Bank with Canara Bank. Dena Bank said the government was still formulating PSU Bank merger policy. Banking stocks might be rallied post this news. The BSE Bankex rose nearly 2%.

Commenting on the same, Ashwin Parekh, Partner-National Leader, Global Financial Services, Ernst & Young, says the government has serious intentions of consolidating banks. "It needs to create fewer, larger banks with bigger balance sheets." BD Narang, Former Chairman, Oriental Bank of Commerce, too shares Parekh's view on the seriousness of the government to consolidate.

Dena Bank shot up 13% and UCO Bank was up 8%. Allahabad Bank, Oriental Bank, IOB, Canara Bank and Union Bank were up 4-5%. Bank of India, SBI, Federal Bank, HDFC Bank and PNB went up 2-2.8%. Karnataka Bank, Bank of Baroda, ICICI Bank, Kotak Mahindra and Axis Bank gained 0.7-1.8%.