Mumbai: The Sensex and Nifty rose on Monday, heading for their fourth session of gains, as lenders advanced on hopes of stable asset quality after ICICI Bank`s positive outlook and a reduction in bad loans at some of the state-run banks.
Gains were pretty broad-based, with the BSE MidCap index hitting a record high for a second consecutive session at 11,392.69.
The moderation in formation of new stress loans, coupled with Finance Minister Arun Jaitley`s plan to infuse nearly $2 billion into state-run lenders, helped the Bank Nifty gain as much as 1.4 percent.
ICICI Bank said on Friday it saw the rate of new troubled loans slowing as the nation`s biggest private sector lender by assets reported a better-than-expected quarterly profit.
The Reserve Bank of India is expected to keep key policy rates unchanged at its policy review on Tuesday, but some investors remain hopeful that the fall in crude oil prices and slowing core sector growth may lead to a surprise cut by the RBI.
"Fundamentals warrant a rate cut. India is the only one which is not cutting rates sufficiently despite a deflationary scenario in the world," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm said.
The Sensex rose 0.4 percent and the Nifty gained 0.34 percent, heading for their highest close since July 23.
Banking shares led gains, with the NSE bank index on track for its fifth winning session. ICICI Bank rose 3.1 percent, while State Bank of India surged 4.5 pct.
Bank of Baroda rallied 6 percent, IDBI Bank gained 3.8 percent, Canara Bank added 3 percent and Union Bank advanced 3.2 percent.
