Key benchmark indices closed higher on Friday led by rate sensitive shares, on renewed hopes that the RBI on Monday, will cut key policy rates and also lower the cash reserve ratio to boost growth and liquidity.
The 30-share Sensex provisionally ended up 258 points or 1.5% at 16,936 and the S&P CNX Nifty gained 80 points or 1.6% to close at 5,134.
(Updated at 15:32 hrs)
Markets edged higher in noon deals due to buying in rate sensitives ahead of the RBI mid-quarter policy review . The Sensex was up 214 points at 16,892 and the Nifty gained 68 points at 5,123.
Earlier in the day, the markets opened higher owing to firm Asian cues. However, amidst volatility the BSE benchmark index touched a low of 16,701 only to recover.Later, the markets edged higher in late noon trades, amid firm European cues, with rate-sensitive shares leading the gains.
In the broader markets, both the midcap and the smallcap indices, up 0.5% each underperformed the Sensex which gained 1.4%.
On the global front, world shares rose and the euro hovered near a three-week high on Friday, lifted by central bank preparations for coordinated liquidity operations in the event of a credit shock after Sunday's Greek election.
Expectations of more monetary stimulus were also boosted by a British plan to flood its recession-hit economy with cash, and after economic data in the United States rekindled talk of more Fed easing. But the Bank of Japan left its policy unchanged on Friday after a two-day meeting.
European shares continued to trade firm with the CAC-40, DAX and FTSE-100 up 0.5-1 % each.
Back home, all the sectoral indices were trading in positive zone. BSE Auto, Bankex and Realty indices surged 2% each followed by counters like Capital Goods,Oil & Gas,Metal, Healthcare, Consumer Durables and FMCG all gaining by 1% each.
Rate sensitives gained ahead on the likelihood of a rate cut by the RBI in its mid-quarter policy review. ICICI Bank and HDFC Bank up 1-1.5 per cent were the major gainers in the banking space.
In the Auto space, Tata Motors surged over 4 per cent and was teh top Sensex gainer after its chairman, Ratan Tata, bought 425,000 shares through open market transaction. Moreover, Tata Motors today said its global sales grew 12% in May. Among other Auto shares, Hero Moto, M&M and Maruti Suzuki have gained between 1-3 per cent.
Other notable gainers included CIL, Hindalco, Tata Steel, Bharti Airtel, L&T, Sun Pharma and RIL up 1-2%.
Sterlite Industries down 2% and Bajaj Auto down 1.5% were only losers among the SEnsex-30.
Among other shares, Alembic Pharmaceuticals has moved higher by 6% to Rs 54.60 after the mid-cap pharmaceutical company said that it has settled the Paragraph IV patent litigation with Novartis on Rivastigmine Tartrate Capsules.
Mastek has surged 14 per cent to Rs 105 on back of over fifteen-fold jump in trading volumes in noon deals on the National Stock Exchange.
Overall breadth was positive as 1,459 stocks advanced while 1,094 declined on the BSE.