Sensex edges higher, IT stocks struggle

Indian stock markets rose higher in the last trading day of the year with profit-taking in banking and IT stocks capping the gains.

The Sensex was up 65 points at 21,208 while Nifty rose 20 points at 6,311. The BSE IT index was down 0.3 per cent with HCL Tech and Infosys down nearly 0.5 per cent each.

Among the banking stocks, HDFC Bank was down 1.2 per cent while Axis Bank fell 0.6 per cent. Elsewhere, shares in Trent rose 3.9 per cent a day after the foreign investment regulator approved a $110 million investment plan by Britain's Tesco.  Shares of Apollo Tyres gained 4 per cent after a deal to acquire U.S.-based Cooper Tire & Rubber Co fell through late last night.

Saurabh Mukherjea, CEO-Institutional Equities, Ambit Capital, says he expects the Sensex to give 15-20 per cent return in the next one year. He sees the economic growth and earnings to pick up in the next year.

Indian stocks are set to post their second successive annual gain, as strong foreign buying this year offset tepid demand from domestic investors and sustained redemptions from mutual funds. Foreign institutional investors have bought $20.1 billion in Indian equities to so far this year.

The Sensex is up nearly 9 per cent this year, having hit a record high on December 9, compared with a 25.7 per cent gain last year.