The Sensex rose on Tuesday, led by lenders such as State Bank of India, as hopes that Parliament would pass the banking amendment bill outweighed disappointment after the Reserve Bank of India (RBI) kept interest rates and the cash reserve ratio unchanged.
RBI kept rates on hold on Tuesday, ignoring government pressure to reduce borrowing costs but said it was shifting focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.
Analysts said domestic markets benefited from improved demand for global risk on the back of signs of a US budget compromise intended to resolve the so-called 'fiscal cliff.'
“The market is getting more hopeful that RBI will lower rates in the next policy meet,” said Hemant Khanwala, head of equities, Kotak Life Insurance.
The banking amendment bill should pass through, looking at the debate in the ongoing Parliament session, he added.
The Sensex rose 0.63 per cent, or 120.33 points, to end at 19,364.75, marking its biggest single day percentage gain since November 30.
More From This Section
The Nifty rose 0.66 per cent, or 38.90 points, to end at 5,896.80, marking its highest close in a week.
State Bank of India ended 1.2 per cent higher after falling as much as 2.8 per cent.
ICICI Bank rose 0.4 per cent, while Bank of India gained 2.9 per cent.