Sensex at near 3-year high; banks soar after RBI policy

MUMBAI (Reuters) - The BSE Sensex rose nearly 2 percent on Tuesday, snapping a five-day losing streak to hit their highest close in nearly three years, as lenders surged after the central bank raised interest rates in line with expectations.

The Reserve Bank of India raised the repo rate by 25 basis points, its second consecutive monthly hike, while bringing down short-term interest rates. Some traders had feared the central bank would raise interest rates more aggressively to combat inflation.

The BSE Sensex provisionally rose 1.71 percent, while the broader Nifty ended up 1.96 percent, marking their highest close since November 2010.

The NSE bank sub-index provisionally jumped 4.4 percent, marking its biggest single-day percentage gain since September 2013.

ICICI Bank Ltd provisionally rose 6.3 percent and State Bank of India Ltd ended 4.1 percent higher.

(Reporting by Abhishek Vishnoi; Editing by Sunil Nair)