Sensex up 185 pts on policy day; blue-chips gain
RBI kept its key policy repo rate unchanged on Tuesday as widely expected but cut the statutory liquidity ratio by half a percentage point to 22 per cent of deposits, effective from August 9.
Sentiment got a boost after foreign investors, who were supporting a 22.9 per cent rally in the broader Nifty so far this year, turned buyers on Monday after selling $494.7 million worth of Indian shares in the previous three sessions.
Foreign investors bought Indian shares worth $61.10 million on Monday, exchange and regulatory data showed.
"RBI policy was quite pragmatic and is anticipating a growth revival. The focus is shifting from just inflation management to facilitate revival of growth in the economy. And, the market has taken it in its full-sense," said Deven Choksey, managing director at KR Choksey Securities.
The BSE Sensex gained 0.7 per cent or 184.85 points to 25,908.01 points, while the Nifty added 62.9 points or 0.82 per cent to 7,746.55 points.
Hopes that increased lending after the RBI measures would help spur investment lifted some blue-chips.
Automobile stocks were among the leading gainers. Mahindra and Mahindra gained 3.8 per cent, while Bajaj Auto closed up 3.2 per cent and Tata Motors added 2.3 per cent.
Real estate stocks also gained. DLF was up 2.2 per cent and Unitech added 6.6 per cent.
Lenders also rose, with State Bank of India adding 0.5 per cent, Bank of Baroda ending up 1.2 per cent and Union Bank of India closing 1.9 per cent higher. Among other gainers, Cummins India ended seven per cent higher, as analysts said the company management has raised its revenue guidance.
However, shares in Tata Communications Ltd closed down 2.4 per cent after the company reported a net loss in the June quarter.