Mumbai: The BSE benchmark Sensex on Tuesday recovered by nearly 127 points in the afternoon trade amid the Reserve Bank hiking the repo rate by 0.25 percent and easing liquidity curbs by cutting MSF rate by same margin in its policy announcement.
The 30-share index, which fell over 38 points in the morning trade, rebounded 126.94 points, or 0.61 percent, to 20,697.22 points in the afternoon trade.
In similar fashion, the wide-based National Stock Exchange index Nifty was trading 34.80 points, or 0.57 percent, higher at 6,135.10 points after falling 8.45 points in early trade.
Sentiments turned better after the RBI cuts Marginal Standing Facility (MSF) rate by 0.25 percent to 8.75 percent which would bring down the cost of short-term funds for banks.
The repo rate or the short-term lending rate has been increased by 25 basis points to 7.75 percent and the economic growth forecast lowered for this fiscal to 5 percent from 5.5 percent in RBI's policy announcement.
Among banking stocks, ICICI Bank gained 2.28 percent to Rs 1,037.70, while State Bank of India was up by 0.87 percent to Rs 1,690.85.