There are hopes that a Narendra Modi led government at the centre would push through reforms and hence economic development. One of the biggest beneficiaries of growth would be the banking sector, which is why banking stocks have seen a phenomenal rally.

ICICI Bank was up more then 4 per cent in trade, while IndusInd Bank gained more then 4 per cent. Other notable gainers from the Bank Nifty were Canara Bank (up 4 per cent), Union Bank of India (up 3 per cent) and Oriental Bank (6 per cent).

However, investors would keenly watch the RBI meeting slated Monetary Policy Review for December 18, when India's central bank will decide whether it should hike policy rates for a third time in a row. Any further hikes by the RBI would dampen the mood for banking stocks.

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