Ignoring RBI's hard monetary stance, markets on Tuesday rose for the third straight day with Sensex closing over 92 points higher tracking strong global cues.
Soon after the Reserve Bank left key policy rates unchanged at the first quarter policy review, the BSE benchmark index declined to day's low of 17,004.09 -- nearly 140 points down from Monday's close.
However, the 30-share index bounced back by nearly 200 points from the day's nadir with buying emerging in 17 stocks including Reliance, ONGC, Sterlite, Tata Motors and Wipro.
The Sensex ended the day higher at 17,236.18, up by 92.50 points, or 0.54 per cent from its previous close. This is highest closing since July 19.
Likewise, the 50-share NSE index Nifty rose by 29.20 points to 5,229, after dipping to 5,154.05 during the day.
Refinery, realty, IT, pharma and metal counters attracted good buying support while consumer durables, banking and power suffered losses. The market breadth remained positive as 1,435 stocks closed higher while 1,296 scrips ended lower.
"The RBI has cut the SLR from 24 per cent to 23 per cent...All other key rates has been kept unchanged. Globally, expectations have arisen that the ECB would do something along with an expected rate cut," said Vivek Mahajan, Head of Research, Aditya Birla Money.
Bharti Airtel was the biggest loser on Tuesday shedding 2.77 per cent on reports of equity raising plans. SBI, Hero Moto and Jindal Steel lost one per cent each.
Brokers said RBI policy stance was largely on expected lines after it had earlier indicated its priority remained inflation. However, shares rose in sync with global market.
The markets had surged over 300 points on Monday on hopes of a rate cut by RBI.
Asian markets, barring China, closed with gains between 0.13 pct and 2.07 per cent. European stocks were last trading mixed with indices in France and Germany up. .
In Asia, only Shanghai Composite ended down by 0.30 per cent. In Europe, the CAC was up by 0.22 per cent and the DAX by 0.48 per cent while the FTSE was down by 0.20 per cent.
Back home, major Sensex gainers included ONGC (3.34 pc), Sterlite Ind (2.64 pc), Tata Motors (1.92 pc), RIL (1.86 pc), Wipro (1.71 pc), Cipla (1.67 pc), HDFC (1.67 pc), Hindalco (1.31 pc), Maruti Suzuki (1.15 pc) and Sun Pharma (1.06 pc).
The losers were led by Bharti Airtel (2.77 pc), SBI (1.27 pc), Hero MotoCorp (1.24 pc) and Jindal Steel (1.02 pc).
Talking about the future outlook, Akshay Gupta, MD & CEO, Peerless Funds Management Company said, "The RBI has placed the ball squarely in government's court by re-iterating their stance of urging the government to address structural supply side imbalances and address inflation".
Among the sectoral indices, the BSE-Oil&Gas rose by 1.80 per cent, the BSE-Realty went up 1.17 per cent, the BSE-IT gained 0.78 per cent, the BSE-HC and the BSE-Metal inched by 0.6 per cent each.
Among the losers, the BSE-CD dipped by 1.84 per cent while the BSE-Bankex shed 0.28 per cent.
Experts said it is clear from RBI stance that unless inflation is under control, rates will not be cut further.
"It is clear from today's move that while the central bank acknowledges the downside risks to growth both from a deficient monsoon and continuing global financial instability, inflation still remains the dominant concern," said Abheek Barua, Chief Economist, HDFC Bank.
The total turnover was up at Rs 2,037.53 crore on Tuesday from Rs 1,748.49 crore Monday.
Foreign Institutional Investors (FIIs) infused Rs 928.95 crore on Monday as per provisional data from stock exchange, after injecting Rs 642.20 crore on July 27.