The Sensex and Nifty continued their dream run on Thursday amid reports that the Narendra Modi government is considering allowing 100% FDI into the Indian banking sector.
While the Sensex rose more than 390 points to hit a fresh life high of 35,489, Nifty touched a new high of 10,887 rising nearly 100 points from Wednesday's close.
At 9:46 am, the Sensex was trading 374 points or 1.07% to 35,456 level. The Nifty was up 90 points to 10,878 level.
Banking stocks led the charge on Dalal Street with Bank Nifty rising nearly 600 points to hit fresh high of 26,887. On the BSE, Bankex too rose to new level 30,540 rising nearly 700 points on reports the government was also considering raising the permissible limit for FDI in public sector banks to 49 percent from the current 20 percent, apart from allowing 100 % FDI in the banking sector.
Currently, up to 49 percent FDI is allowed in private banks without the permission of the government, and up to 74 percent can be brought in with the government's approval.
The government's plan to not widen net borrowings gave additional legs to market that has been pricing in the potential for further fiscal deficit slippage. This has now boosted expectations for a budget that may lean more towards spending to propel economy. FDI plans for banks and GST meeting also meant that indices opened with a gap up, making it the 8th time Nifty has tested a new record peak this month. Market action after initial surge was measured though, with near month derivatives expiring next week, said Anand James, Chief Market Strategist at Geojit.
Top Sensex gainers were private sector lenders such as HDFC ( 2.79%) , YES Bank (2.64%), HDFC Bank, IndusInd Bank (2.47%) and ICICI Bank (1.78%).
Market breadth was positive with 1529 stocks rising against 693 falling on BSE.