Mumbai: After surging 250 points in anticipation of a rate cut, the Sensex Monday closed only 78 points higher -- registering 9th straight day of gains -- as investors were not excited at RBI just reducing CRR by 0.25 percent and keeping key interest rates unchanged.
The BSE benchmark index, which had gained 1,153 points in last eight sessions, advanced on Monday by 78.04 points, or 0.42 percent, to close at 18,542.31, a level last seen on July 26 last year. With Sensex rising for nine straight sessions, this is the index's longest gaining trend since October 2007.
In early trade, the Sensex touched day's high of 18,715.03 but trimmed some of the 250-point gain after Reserve Bank kept lending rates unchanged in view of risks from inflation and twin deficits, but cut Cash Reserve Ratio by 0.25 percent to release Rs 17,000 crore of primary liquidity into the system.
Brokers said rate-sensitive shares like realty, banking and auto sector attracted buying as RBI indicated it may cut rates later if inflationary pressures subside. Capital goods, power, metal and refinery also saw demand.
In the 30-share Sensex, 18 stocks gained led by Reliance Industries, State Bank of India, L&T, BHEL, Hero MotoCorp, ICICI Bank and Jindal Steel.
The 50-share NSE index Nifty rose by 32.35 points, or 0.58 percent to 5,610, after touching a high of 5,652.20.
Brokers said market participants cheered the government decisions to accelerate economic reforms by allowing FDI in organised retail and aviation among others.
"Markets rose on back of further policy announcements made by the government last Friday. The RBI responded to these initiatives by reducing CRR by 0.25 percent," said Dipen Shah, Head Fundamental Research, Kotak Securities.
The Sensex had rallied nearly four percent last week aided by the US Fed announcement of a third round of stimulus measures and increase in diesel prices to reduce the government subsidy burden, analysts said.
Across BSE sectoral indices, the Realty index gained the most by rising 6.21 percent, followed by Capital Goods (3.74 percent), Bankex (3.24 percent), Power (2.19 percent).
Chanda Kochhar, MD & CEO, ICICI Bank said: "While the steps taken recently by the government are positive for fiscal consolidation, the central bank wants to see how the deficit situation and inflation evolve before undertaking further cuts."
Meanwhile, Asian markets closed mixed today. Key indices from Hong Kong, Singapore and Taiwan finished slightly better while from China and South Korea settled with losses. Japanese stock market was closed today.
European shares, however, displayed weak trading in their afternoon deals. The CAC was down by 0.59 percent, the DAX by 0.18 percent and the FTSE by 0.23 percent.
Overall, 18 out of 30 Sensex-based scrips ended with major gainers being Jindal Steel (5.99 percent), ICICI Bank (5.39 percent), SBI (5.36 percent), L&T (4.35 percent), BHEL (4.30 percent), Sterlite Ind (4.16 percent), RIL (3.89 percent), Bharti Airtel (3.76 percent), Hero MotoCorp (3.07 percent), Tata Motors (2.72 percent), M&M (1.80 percent) Maruti Suzuki (1.66 percent) and Tata Steel (1.55 percent).
FMCG major ITC, however, was the top loser from Sensex with a fall of 5.48 percent, followed by TCS (5.03 percent), Dr Reddy's Lab (4.30 percent), HUL (2.76 percent), Infosys (2.67 percent), Coal India (2.05 percent) and Wipro (1.51 percent).
"The rise in stock market was also well supported by strengthening rupee, which gained about 3 percent over last two days. This led to profit booking in the IT stocks," said Nagji K Rita, CMD, Inventure Growth & Securities.
Among sectoral indices, the BSE-Realty spurted by 6.2 percent, followed by BSE-CG (3.7 percent), Bankex (3.24 percent), BSE-Power (2.2 percent), BSE-Oil&Gas (1.9 percent) and BSE-Auto (1.81 percent).
The total turnover improved further to Rs 3,171.92 crore from Rs 2,746.29 crore last Friday.
Persistent capital inflows also boosted the sentiment, market analysts said. Foreign Institutional Investors (FIIs) pumped in Rs 2,833.72 crore on last Friday as per provisional data with stock exchanges.