Sensex up 248 points as RBI surprises with status quo on rates
Mumbai: The benchmark Sensex gained for the first time in seven days, rising 248 points Wednesday after the RBI unexpectedly decided to keep key policy rates unchanged.
Realty, capital goods, oil & gas and power shares led all 12 BSE sectoral indices higher.
Heavyweight Reliance Industries, along with HDFC Bank and State Bank of India, helped to lift the Sensex as all but three of the 30 index stocks advanced.
BHEL and Tata Power topped the gainers on the index. Auto stocks Bajaj Auto and Hero Motocorp also moved up.
The S&P BSE Sensex opened lower and surged to the day's high of 20,917.57 after the RBI's Mid-Quarter Monetary Policy Review. It ended at 20,859.86, a rise of 247.72 points or 1.2 percent.
The Reserve Bank of India kept the short-term lending rate unchanged 7.75 percent, against expectations of a 25 bps increase. The cash reserve ratio was maintained at 4 percent.
"The RBI unexpectedly kept the policy rate on hold in light of the weak growth backdrop and as it expects inflation to ease, partly as a result of food supplies normalising," Leif Lybecker Eskesen, Chief Economist for India & ASEAN at HSBC, said in a note.
"However, it also signalled that if that was not to materialise, it stands ready to tighten further to stabilise inflation expectations. It may well come to that."
In the previous six sessions, the Sensex had plunged by over 714 points, or 3.35 percent, from its peak close of 21,326.42 on December 9.
The CNX Nifty on the National Stock Exchange flared up by 78.10 points, or 1.27 percent, to end at 6,217.15. The SX40 on the MCX Stock Exchange closed up 135 points at 12,399.59.
Trent gained 10.74 percent after UK retailer Tesco said it had applied to buy a 50 percent stake in Trent Hypermarket Ltd and open supermarkets in India.
Biotechnology major Biocon, which signed a pact with Quark Pharmaceuticals to develop an ophthalmic drug, advanced 11.38 per cent.
India Inc welcomed the central bank's decision, saying an interest rate hike is not the solution to tackle inflation. RBI Governor Raghuram Rajan said continuing weakness in growth was the main driver of his policy action.
"RBI's move deviated from its conventional practice to support growth," said Jignesh Chaudhary, Head of Research at Veracity Broking Services. "Markets are now keenly watching Fed monetary statement due later tonight."
Key indices in Japan moved up on higher exports and a fall in the yen against the dollar. Other Asian stock indices were mixed ahead of the Federal Reserve's decision on its stimulus programme. European stock markets traded higher.
In the domestic market, the Sensex gainers were led by BHEL (5.7 percent), Tata Power (4.04 percent), Bajaj Auto (3.87 percent), Hero MotoCorp (3.14 percent) and Larsen & Toubro (2.83 percent).
Other shares moving up included State Bank of India (2.67 percent), HDFC (2.59 percent), Reliance Industries (2.35 percent), ONGC (2.29 percent) and Gail India (2.29 percent).
Foreign institutional investors bought shares worth a net Rs 249.93 crore yesterday, according to provisional data from the stock exchanges.
Among the S&P BSE sectoral indices, Realty rose 3.51 percent followed by Capital Goods 2.61 percent, Oil & Gas 2.15 percent, Power 2.09 percent, Auto 1.73 percent, Bankex 1.4 percent, Consumer Durables 1.35 percent and Healthcare 1.16 percent.
The total market breadth was positive as 1,497 stocks finished higher while 951 closed lower.