Rate sensitives boost markets; Realty index up 3%

Indices remained firm in late noon trades led by rate sensitive shares after RBI kept policy rates unchanged

Benchmark share indices firmed up in late noon trades led by rate sensitive shares  after the Reserve Bank of India kept key policy rates unchanged, despite calling current inflation too high, citing the prospect of easing retail prices and its concerns about the weak domestic economy.

At 2:20PM, the 30-share Sensex was up 242 points at 20,855 and the 50-share Nifty was up 79 points at 6,218.

The rupee firmed up against the US dollar and was up at Rs 61.88 compared with previous close of Rs 62.02 per dollar. The rupee had opened at Rs 61.83 and and touched a high of Rs 61.78 in morning trade due to rise in equities.

Currency dealers see the rupee weakening during the day due to dollar demand by oil marketing companies. Besides that the outcome of Fed's meet is also awaited.

Asian markets were trading mixed with Japan's benchmark index Nikkei leading the gains on reports that the Prime Minister may shortly unveil plans to boost the economy. The benchamrk Nikkei ended up 2% at 15,588. Hang Seng was up 0.3%. Shanghai Composite and Straits Times were down 0.1% each.

The BSE Realty index was the top gainer among the sectoral indices 3.5% followed by Oil and Gas, Power, Bankex and Auto.

Realty shares firmed up on hopes that stable interest rates on home loans may revive demand for new homes. DLF was up nearly 6%  and IndiaBulls Real Estate was up 4.5%.

Index heavyweight Reliance Industries was up 2.5% at Rs 860 contributing the most to Sensex gains followed by financials. ONGC was up nearly 2% at Rs 280.

Capital Goods shares L&T and BHEL were up 3.1-4.7% each on hopes that pick up in investment activity would help revive growth in new order inflows.

HDFC extend gains and was up 2.8% on hopes that the mortgage lender may see growth in home loans as banks are likely to hike rate on home loans.

Bank shares firmed up on hopes that credit growth would continue to remain steady on the back of stable interest rates. SBI, HDFC Bank were up 0.8-3% each while ICICI Bank pared most of the early gains and was trading flat.

In the auto pack two-wheeler majors Bajaj Auto and Hero MotoCorp were up over 3% each while Maruti Suzuki and M&M were up 1-2% each on hopes that volume growth would continue on steady interest rates on auto loans.  

Among other shares, Biocon has moved higher by 5.3% at Rs 414, its highest level since January 2011 on the BSE, after the company said it has entered into licensing and collaboration agreement with Quark Pharmaceuticals Inc for development of range of siRNA (small interfering RNA) based novel therapeutics.

Larsen & Toubro (L&T) has moved higher by 3% at Rs 1,098 after the company said its power transmission vertical has bagged a Rs 2,935 crore order or setting up transmission and distribution network in Qatar.

In the broader market, the BSE Mid-cap index extended gains and was up 1.3% and the Small-cap index was up nearly 1%.

Market breadth was strong with 1,378 gainers and 937 losers on the BSE.