RBI's move lifts Sensex by 217 points; banks, IT shine

Dalal Street today cheered the Reserve Bank of India's (RBI) decision to refrain from hiking key policy rates and infuse liquidity into the system, as the benchmark Sensex surged over 217 points with buying in the interest sensitive stocks.

The RBI's decision not to change its lending and borrowing rates, coupled move to infuse liquidity in the banking system to the tune of Rs48,000 crore, offset weak global cues and rise in food inflation.

The Bombay Stock Exchange's 30-share bellwether Sensex witnessed a highly volatile trade but ended 217.08 points higher at 19,864.85, triggered by late-buying interest in the financial and realty stocks.

A similar trend was seen in the National Stock Exchange's wide-based Nifty which finished at 5,870.75, reflecting a gain of 0.37% or 21.55 points.

Marketmen said while the apex bank's decision on rates was in line with the street's hopes, reduction in statutory liquidity ratio (SLR) by one percentage point to 24% was a positive surprise.

"RBI kept all key policy rates unchanged, though a 1% cut in SLR, the portion of deposits that banks park in government securities, was unexpected. This coupled with the decision to infuse Rs48,000 crore (within the next one month) is a big positive for the markets," IIFL economist Ashutosh Datar said.

Welcoming the Reserve Bank's move, top lenders State Bank of India and ICICI Bank advanced by 2.44% each, while HDFC Bank went higher by 1.8%.

Also in the limelight were the IT counters, which traded firm throughout the day, despite a volatile market. The bellwether Infosys Technologies -- which carries maximum weight on Sensex after RIL -- with a gain of 2.77%, became the major contributor in the overall Sensex gain.

Software majors TCS and Wipro also witnessed a surge of 3.56% and 2.71% in their respective stocks.

"IT stocks extended recent gains on hopes of strong third quarter results, positive economic data in the US, and strengthening dollar," said an expert.

Brisk buying in the motorcycle giant Hero Honda in the second half, also gave a much needed push to the market. The counter accelerated by 3.57% amid reports of the break-up among the promoters -- Hero Group and Honda of Japan.

However, other auto majors including Mahindra & Mahindra and Maruti Suzuki spoilt the party on the bourses with a loss of 2.73% and 1.23% respectively, on worries that the hike in petrol prices could hurt demand for vehicles.

Interest rate-sensitive realty stocks DLF and Reliance Infra also went up by 1.56% and 0.50%.

In all, 21 of the 30-Sensex scrips ended in a positive terrain with metals dazzling on the street. Major gainers were -- Tata Steel (2.54%), Sterlite Industries (0.67%) and Hindalco (0.88%).

State-run Oil and gas giant ONGC grabbed investors' attention after its board today approved a special dividend of Rs32 per share, a stock split and a bonus issue. The scrip ended with a gain of 0.55%.

Weak global peers failed to discourage investors back home. Asian markets ended mixed with China's Shanghai shedding 0.46% and Japan's Nikkei closing with a marginal gain of 0.01%.

European markets were trading subdued in the afternoon session on the fears of euro-zone crisis.