Sensex up 113 points on RBI rate cut speculation

Stocks rose to the highest in a month today, led by financial companies. ICICI Bank and State Bank of India (SBI) gained after Citigroup said the central bank may cut interest rates in coming months.

ICICI Bank, the nation’s biggest non-state lender, gained 3.5 per cent to a three-week high after Citigroup analyst Rohini Malkani said the Reserve Bank of India (RBI) may cut its repurchase rate by another 1 percentage point in coming months, helping to boost lending. SBI rose 1.1 per cent.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, climbed 112.86, or 1.3 per cent, to 8,976.68. The S&P CNX Nifty Index on the National Stock Exchange added 1.4 per cent to 2,794.70. The BSE 200 Index advanced 1.3 per cent to 1,053.64.

Rates are likely to be cut “in the next financial year to help boost some industries that are struggling,” said UP Bhat, who manages Rs 400 crore in equities at Canara Robeco Asset Management Company in Mumbai.

ICICI Bank gained 3.5 per cent to Rs 334.65. SBI rose 1.1 per cent to Rs 960.30.

The RBI may pare its repurchase rate further after lowering it by 4 percentage points since October, Citigroup’s Malkani said.