Sensex regains 10k-level, repo cut fails to trigger selling

Snapping its three-day losing spree, the benchmark Sensex on Monday regained the vital 10,000-level on goody buying support in information technology (IT) and banking stocks, belying apprehensions that a cut in the short-term lending rate by the Reserve Bank of India (RBI) would trigger large-scale selling.

After breaching the crucial 10,000-mark in the opening trade itself, the bellwether index on the Bombay Stock Exchange (BSE) settled the day at 10,223.09, a rise of 247.74 points, or 2.48 per cent, over its previous close.

Owing to heavy selling pressure in the last three trading days, the Sensex had lost a hefty 1,508 points, or 13.0 per cent, and fallen below the 10,000-level on Friday.

The 50-share Nifty of the National Stock Exchange (NSE) also gained 48.45 points, or 1.58 per cent, to close at 3,122.80.

Marketmen attributed early rise to firm trends in Asian and European bourses. They said the bellwether index even touched a high of 10,538.05 points but plunged to day’s low of 10,023.28 soon after RBI’s rate cut. Brokers said hectic buying by domestic institutional investors (DIIs) was alternated by profit selling, leading to a significant fall in the Sensex.

The market welcomed the central bank’s move to reduce the short-term lending rate (repo), which was expected to lead to cheaper credit and result in the overall growth of the industry.

After injecting Rs 1.45 lakh crore into the banking system to improve liquidity, the apex bank, in a surprise move this noon, just days ahead of its mid-term monetary review, slashed the repo rate — the rate at which banks borrow from RBI — to eight per cent with immediate effect.

Elsewhere, Asian indices ended up by about 2-5 per cent, while European markets were up by about 2 per cent in their morning trading.