Mumbai, June 6 (IANS) The domestic benchmark indices surged on Friday after the Reserve Bank of India (RBI) reduced repo rate by 50 basis points to 5.50 per cent and cash reserve ratio (CRR) by 100 basis points (in four tranches).
Sensex gained 746.95 points or 0.92 per cent at 82,188.99 and the Nifty rose 252.15 points or 1.02 percent to close at 25,003.05.
The rise was led by banking stocks. Nifty Bank closed at 56,578.40, up 817.55 points or 1.47 per cent. During the day, Bank Nifty touched the level of 56,695, which is the highest level of the main banking index so far.
Along with largecaps, midcaps and smallcaps also witnessed a rise. The Nifty Midcap 100 index was up 707.30 points, or 1.21 per cent, at 59,010.30, and the Nifty Smallcap 100 index was up 149.85 points, or 0.81 per cent, at 18,582.45.
Rupak De from LKP Securities said the stock index has moved up sharply following a bazooka policy move by the RBI.
“It closed above the 25,000-mark after several sessions, indicating a surge in optimism among market participants. Typically, a rally followed by consolidation often results in an upward breakout, and this time too, we expect Nifty to break out above the recent consolidation range,” De noted.
The tremendous rate cut and liquidity boost via the CRR cut is expected to facilitate swift transmission of lower rates, reinforcing RBI’s strong commitment to fostering economic growth, boosting investment, and stimulating consumption.
Rate-sensitive sectors, including banking, real estate, automobiles, and consumer durables are leading the rally, said experts.
Going forward, the impact of the rate cut is expected to continue influencing market sentiment.
“Rate-sensitive pack, along with select themes like railways, are likely to stay in focus, while other sectors may contribute on a rotational basis. We continue to recommend a ‘buy on dips’ strategy with an emphasis on selective stock picking,” said Ajit Mishra from Religare Broking Ltd.
–IANS
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