A benchmark index of Indian equities markets closed Tuesday’s trade near a three-year high, after the Reserve Bank of India (RBI) raised a key policy interest rate, while easing liquidity in the financial system.
The 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 20,593.49 points, closed the day’s trade at 20,929.01 points, up 358.73 points or 1.74 percent from the previous day’s close at 20,570.28 points.
The benchmark index’s record high is 21,206.77 points, hit in January 2008. The 30-scrip barometer had hit a high of 21,039.42 points last week, for the first time since Nov 8, 2010.
The Sensex touched a high of 20,952.55 points and a low of 20,493.66 intra-day.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made healthy gains. It ended at 6,220.90 points, up 119.80 points or 1.96 percent.
Good buying was seen in bank, automobile, metal, healthcare and capital goods sectors.
The S&P BSE Bank index was up 534.92 points, followed by automobile index, which gained 287.01 points, metal index,up 187.32 points, healthcare index, up 132.40 points, and capital goods index, up 103.92 points.
The surge in the market came after the RBI in its second quarter review of the monetary policy for 2013-14 hiked the repo rate by 25 basis points or 0.25 percent to 7.75 percent. Repurchase or repo rate is the rate of interest that banks pay when they borrow money from the central bank to meet their short-term funds requirement.
Taking a cue from the stability in the currency markets, the RBI rolled back some of the measures put in place to support the rupee. The Marginal Standing Facility (MSF) rate is reduced by 0.25 percent to 8.75 percent.
The move will ease liquidity in the banking system. MSF is a window for banks to borrow from the RBI.
“The Sensex opened on a sober note but rallied strongly post the monetary policy announcements. The liquidity enhancement measure was taken as positive by bank stocks. Apart from this, auto and metal stocks were also trading firm,” said Sanjeev Zarbade, vice president – private client group research, Kotak Securities.
The major Sensex gainers included Maruti Suzuki, up 8.19 percent at Rs.1,636.90, a day after the company reported a 194.7 percent rise in net profit for the second quarter of the current fiscal at Rs.670.2 crore, up from Rs.227.45 crore in the corresponding period of 2012-13.
Other gainers included ICICI Bank, up six percent at Rs.1,075.45; Tata Steel, up 4.25 percent at Rs.325.65; Mahindra and Mahindra, up 3.77 percent at Rs.900.30; and State Bank of India (SBI), up 3.65 percent at Rs.1,737.30.
BHEL was the only blue chip company which lost in the day’s trade, down 0.07 percent at Rs.136.30.
Among the Asian markets, Japan’s Nikkei closed 0.49 percent down, Hong Kong’s Hang Seng was higher by 0.18 percent, and China’s Shanghai Composite Index fell 0.23 percent.
In Europe, London’s FTSE 100 was trading 0.38 percent higher, and Germany’s DAX Index was up 0.13 percent. The French CAC 40 Index gained 0.28 percent.
——-IANS