Sensex rallies

Expectations that the UPA government will succeed in getting majority support for its move on foreign direct investment (FDI) in retail, combined with global financial powerhouse Goldman Sachs upgrading the Indian economy and the market, lifted investor sentiment on Dalal Street.
With realty, banking and auto stocks leading, the sensex closed 329 points higher at 19,171, a near 19-month high for the index.
Goldman Sachs said that they expect the NSE nifty to rise to 6,600 by the end of 2013, translating into a rise of 13% from the current level of about 5,800. For the sensex, a 13% rise would take it to the 21,700 level — an all-time peak, which is about 700 points above the previous closing peak of 21,005 seen on November 5, 2010. In its report, Goldman Sachs raised its ratings for the Indian market to ‘overweight’ from ‘market-weight’ earlier, saying that economic growth is on the path of recovery and inflation will come down.
The rally could get a further boost on Friday as, after the close of trading on Thursday, RBI announced that it would purchase government securities worth up to Rs 12,000 crore from the market on December 4 — a step that would infuse funds into the system and may help in bringing down interest rates a bit.
The rupee on Thursday sharply appreciated by 63 paise, its biggest gain in two months, to end at 54.83, helped by capital inflows worth nearly $300 million and sustained dollar sales by exporters. Weak dollar overseas and rising hopes of government being able to push through reforms helped rupee rise. Thursday’s 63-paise gain is the highest single-day gain after a rise of 92 paise on September 21, 2012. The dollar index was down by 0.22% against a basket of six major currencies as investors on Wednesday heard optimism from Washington about budget talks that could allow the US economy to avert tax hikes and spending cuts.