Sensex soars 577 pts as RBI holds rate

Sensex soars 577 pts as RBI holds rate

The benchmark Sensex shot up 577 points on Thursday, after the RBI kept the policy rate unchanged, but said that growth would rebound this fiscal amid softening inflation.

Equities were also buoyed by favourable global trends, after the US indicated that it was open to negotiations in its trade dispute with China, easing fears of a full-blown trade war. A string of positive domestic cues, including forecast of a normal monsoon and encouraging services sector PMI data, added to the buying momentum.

The Reserve Bank kept the repo rate unchanged at 6% as widely expected, but lowered retail inflation projection to 4.7-5.1% for the first half of the fiscal. It also said that India's economic growth rate is expected to strengthen to 7.4% in the current financial year, from 6.6% in 2017-18, on account of revival in investment.

The BSE Sensex, which opened strong at 33,289.96, surged to the session's high of 33,637.46, soon after the RBI's policy announcement, before finally ending at 33,596.80, up 577.73 points, or 1.75%. This was its biggest single-day gain since March 12, when it had rallied 610.80 points. The gauge had lost 351.56 points in the previous session.

On similar lines, the NSE Nifty, after shuttling between 10,331.80 and 10,227.45, finished the day 196.75 points, or 1.94 points higher at 10,325.15.

Rate sensitive stocks were at the forefront of the rally, after the RBI eased NPA provisioning norms for banks.

The BSE Banking index surged 2.78%, as shares of state-run SBI rose 4.66%, followed by ICICI Bank 3.52%, Kotak Bank 3.38%, Axis Bank 2.65%, IndusInd Bank 2.52%, and YES Bank 2.36%.

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