Dalal Street on Thursday cheered Reserve Bank of India's decision to refrain from increasing key policy rates and infuse liquidity into the system, as benchmark Sensex surged over 217 points with buying in interest-sensitive stocks.
The Reserve Bank's decision not to change its lending and borrowing rates, coupled with move to infuse liquidity in the banking system to the tune of Rs 48,000 crore, offset weak global cues and rise in food inflation.
The Bombay Stock Exchange's 30-share bellwether Sensex witnessed a highly volatile trade but ended 217.08 points higher at 19,864.85, triggered by late-buying interest in financial and realty stocks.
A similar trend was seen in the National Stock Exchange's wide-based Nifty, which finished at 5,870.75, reflecting a gain of 0.37 per cent, or 21.55 points.
Marketmen said while the apex bank's decision on rates was in line with the street's hopes, reduction in statutory liquidity ratio (SLR) by one percentage point to 24 per cent was a positive surprise.
"RBI kept all key policy rates unchanged, though a 1 per cent cut in SLR, the portion of deposits that banks park in government securities, was unexpected. This coupled with the decision to infuse Rs 48,000 crore (within the next one month) is a big positive for the markets," IIFL Economist Ashutosh Datar said.
Welcoming the move, top lenders State Bank of India and ICICI Bank advanced 2.44 per cent, each, while HDFC Bank went higher by 1.8 per cent.
Also in the limelight were the IT counters, which traded firm throughout the day, despite a volatile market. The bellwether Infosys Technologies - which carries maximum weight on Sensex after Reliance Industries - with a gain of 2.77 per cent, became the major contributor in the overall Sensex gain.
Software majors Tata Consultancy Services and Wipro also witnessed a surge of 3.56 per cent and 2.71 per cent in their respective stocks.
"IT stocks extended recent gains on hopes of strong third quarter results, positive economic data in the US, and strengthening dollar," said an expert.
Brisk buying in motorcycle giant Hero Honda in the second half, also gave a much needed push to the market. The counter accelerated 3.57 per cent amid reports of the break-up among the promoters - Hero Group and Japan-based Honda.
However, other auto majors, including Mahindra & Mahindra and Maruti Suzuki, spoilt the party on the bourses with a loss of 2.73 per cent and 1.23 per cent, respectively, on worries that the increase in petrol prices could hurt demand for vehicles.
Interest rate-sensitive realty stocks DLF and Reliance Infra also went up 1.56 per cent and 0.50 per cent, respectively.
In all, 21 of the 30-Sensex scrips ended in a positive terrain with metals dazzling on the street. Major gainers were Tata Steel (2.54 per cent), Sterlite Industries (0.67 per cent) and Hindalco (0.88 per cent).