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Sensex hits 4-month high on rate-cut hopes

The Reserve Bank of India is expected to cut interest rates by 25 basis points at its policy review on Wednesday, a Reuters poll showed, after consumer inflation hit a two-year low in December, giving the central bank room to ease.

twitter-logo Reuters        Last Updated: February 6, 2017  | 13:22 IST
Sensex hits 4-month high on rate-cut hopes

The market rose for a fourth straight session on Monday to a four-month high as investors bet the central bank would ease interest rates this week to help revive demand after Prime Minister Narendra Modi's currency crackdown last year.

The Reserve Bank of India is expected to cut interest rates by 25 basis points at its policy review on Wednesday, a Reuters poll showed, after consumer inflation hit a two-year low in December, giving the central bank room to ease.

The positive sentiment lifted midcaps such as Adani Enterprises, Wockhardt and Godrej Industries, sending the NSE midcap 100 index higher by 1 percent to a record high.

Still, some analysts say shares could ease as the NSE index approaches the 9,000 level after recent gains.

"Markets are in a bullish mood because of rate-cut expectations," said RK Gupta, managing director at Taurus Asset Management Company.

"However, irrespective of what the RBI does, I expect the market to correct itself with the upside being 9,000 points."

The broader Nifty was up 0.7 percent at 8,802.30 as of 0555 GMT after earlier hitting its highest since September 26, 2016.

The benchmark Sensex was 0.8 percent higher at 28,465.38 after earlier hitting its highest since October 5, 2016.

Banking stocks were among the top gainers with ICICI Bank and Bank of Baroda rising as much as 1.94 percent and 2.82 percent, respectively.

Among the losers, Dr. Reddy's Laboratories Ltd fell as much as 3.14 percent after the company reported a 16 percent drop in its consolidated net profit for the December quarter.

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