In the long run, the decision could bring clearer rules to a sector that has failed to provide India with enough power because it has been so hamstrung by confusion and scandals over concessions allegedly handed to government cronies.
De-allocation could raise import bill by $3 billion, add to coal shortage.
The bank says valuations are still high, foreign mutual funds are still 'very overweight' on Indian shares.
The domestic currency had lost 49 paise to close at a three-month low of 60.55 on Thursday on capital outflows after the US Fed trimmed its monthly bond buying programme by another $10 billion.
The Bombay Stock Exchange has resumed trading after three hours on Thursday.
n New York market, the dollar posted second-quarter losses against nearly all major rivals yesterday, with the exception of the euro.
These sectors have underperformed the wider market over the past year and are seen having far more upside potential if the economy picks up thanks to Modi's reformist agenda.
The investment bank also says no ministries were merged even as some ministers were given more than one portfolio.
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The benchmark has gained 2 per cent this week on continued hopes the incoming Narendra Modi government would unveil substantial economic reforms.
The moves by the RBI, announced late on Wednesday, should increase supplies of gold and brighten the earnings outlook for jewellery makers after the government took tough measures to curb imports last year, analysts said.
Tata Motors is trading at 8.32 times 12-month forward PE, just marginally away from 8.31 times for Sesa Sterlite, currently the cheapest in the 30-member Sensex.
ICICI Bank Ltd, India's biggest private sector lender, posted its slowest quarterly growth in four years as asset quality worsened and funds set aside for bad loans and contingencies almost doubled from a year earlier.
The biggest private sector lender, are swarming the market with discounts and special offers
The lender has said it is betting on increased loan demand in smaller cities to boost growth in a slowing economy.
An obscure Indian bank has been an unlikely beneficiary of Western sanctions against Iran, handling billions of dollars from frozen oil payments that boosted its interest margins, but is now having to prepare itself for life after the windfall.
With the economy growing at its slowest rate in a decade, India's banking system is facing rising levels of stressed loans, with $100 billion, or about 10 percent of the total, categorised as bad or restructured.
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UBS added that its strategists are positively surprised by the scope and tone of the Plenum document.
SBI, which accounts for a quarter of the country's loans and deposits, said on Wednesday its net profit fell 35 per cent to Rs 2,375 crore (Rs 23.75 billion) in the quarter ended September.
Net profit rose to Rs 1,982 crore (Rs 19.82 billion) in the quarter ended September 30 from about Rs 1,560 crore (Rs 15.6 billion) a year earlier, the bank said on Tuesday. Net interest income grew nearly 15% to Rs 4,480 crore (Rs 44.8 billion).
The investment bank adds that company's September-quarter earnings came in line with consensus estimates.
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