Sensex remains in positive zone after RBI's status quo move

Maintaining its early upward trend, the benchmark BSE Sensex was trading over 227 points higher as rate-sensitive stocks surged even after the RBI kept its key policy rates unchanged in line with expectations.

The rupee also maintained its strengthening trend, rising 34 paise to 65.16 against the US dollar at the forex market.

Investor sentiment also got a boost after the eight core sectors recorded a five-month high growth rate of 4.9 per cent in August, helped by robust performance of coal, natural gas and electricity, brokers said.

The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had witnessed 3.1 per cent expansion in August last year.

The 30-share index, which had gained over 171 points in late morning trade trade, was trading higher by 227.33 points, or 0.72 per cent, to 31,724.71 at 1500 hours.

The barometer had gained 337.57 points in the previous three sessions.
The wider National Stock Exchange index Nifty was also trading above the crucial 9,900-mark at 9,929.05, gaining 69.55 points, or 0.71 per cent at 1500 hrs.

Brokers said the RBI's decision in its fourth bi-monthly policy review to keep key interest rate unchanged was largely in line with investor expectations in view of upward trend in inflation.
Consequently, the repo rate, at which it lends to the system, will stand at 6 per cent while reverse repo will also continue to be at 5.75 per cent.

The central bank left the cash reserve ratio static at 4 per cent.
The central bank has, however, slashed the statutory liquidity ratio (SLR) or the percentage of deposits that banks have to park in government securities, by 0.50 per cent to 19.50 per cent. The move is expected to raise buoyancy in the loans market as banks will have slightly higher funds for lending.

The central bank cut growth projection for the current fiscal to 6.7 per cent.
The six-member Monetary Policy Committee (MPC) voted 5:1 for the decision, with only Ravindra Dholakia voting for a 0.25 per cent reduction in rates.

Banking index surged 0.48 per cent as shares of state- run SBI rose 0.74 per cent to Rs 253.15, while Kotak Bank rose 2.48 per cent to Rs 1,031.30, HDFC Ltd gained 0.50 per cent to Rs 1,771.35.
Other gainers kept market higher were Sun Pharma, ITC Ltd, Reliance Industries, Dr Reddy's, M&M, Power Grid and Tata Motors.