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Markets continued to trade firm in late morning trades on Tuesday with rate-sensitive shares leading the gains after liquidity measures announced by the central bank would boost lending.
The Reserve Bank of India late Monday further eased liquidity by cutting the marginal standing facility (MSF) rate, a key overnight interest rate, by 50 basis points to 9%.
At 11:35am, the 30-share Sensex was up 125 points at 20,020 mark and the Nifty was trading higher by 34 points at 5,940.
The rupee was trading stable in early trades due to thin dollar demand. But currency dealers believe that bids from private oil marketing companies will emerge during the day.
At 11:35am, the rupee was trading at Rs 61.64, up 16 paise compared to Monday's close. Currency dealers also opine that state-run banks may start buying dollars on behalf of the central bank to boost the foreign exchange reserves kitty.
Due to cut in the MSF rate, short-term rates eased in early trades. The call money rate was quoting at 9.10% compared with weighted average rate of 9.48% yesterday. While the Collateralized Borrowing and Lending Obligation (CBLO) rate was quoting at 9.01% compared with weighted average rate of 9.50% yesterday.
The BSE Realty index was the top gainer up 2% followed by Capital Goods, Bankex, Consumer Durables and Auto indices which were up over 1% each.
Realty major DLF and HDIL were up over 3% each while Prestige Estates and Unitech were up 2% each.
In the capital goods space, L&T was up 2.9% and BHEL was up 0.3%. Among mid-caps in the sector Punj Lloyd was up 4.4% and AIA Engg was up 2.8%.
In the bank pack, ICICI Bank, HDFC Bank and SBI were up 1-2.8% each.
Other gainers which contributed the most to Sensex gains include, Tata Motors, ITC and Bharti Airtel among others.
Among other shares, IL&FS Engineering and Construction Company has soared 9% to Rs 34, extending its previous day’s rally on BSE, after the company announced the rights issue plan to the existing shareholders. The stock has surged almost 20% in past two trading days from Rs 28.45 on October 4.
Shares of Financial Technologies were up 3.5% at Rs 173 on the BSE after the company clarified to a query by the stock exchange.
Shares of Heidelberg Cement were up nearly 3% at Rs 36.20 on the BSE after the company announced the sale of its cement grinding unit to JSW Steel for an undisclosed amount.
In the broader markets, the BSE Mid-cap and Small-cap indices were up over 0.5% each.
Market breadth continued to remain strong with 1,157 gainers and 787 losers on the BSE.
