The Reserve Bank of India, unveiling its June mid quarter monetary policy review, left unchanged the repo rate and CRR at 7.25% and 4%, respectively, and said only durable receding of inflation will open up the space for monetary policy to continue to address risks to growth. A falling rupee too played a role in the apex bank's decision to hold rates.
The central bank's decision to keep rates unchanged did trigger a sell-off of sorts, particularly in banking, realty and infrastructure stocks, and pushed the key indices Sensex and Nifty down into the red in mid morning trade, but the market bounced back smartly and ended the session on a firm note, thanks largely to a positive trend in Asian and European markets and on encouraging news on the monsoon front.
The 30-share BSE sensitive index Sensex, which tumbled to 19,084.68 post release of the central bank's monetary policy review, rallied to 19,344.28 in late afternoon trade and finally ended at 19,325.87, recording a gain of 147.94 points or 0.77%.
The broader 50-stock Nifty index of the National Stock Exchange closed at 5850.05, well off the day's low of 5770.25, with a solid gain of 41.65 points or 0.72%. The Nifty touched a high of 5854.90.
Automobile, capital goods and consumer durables stocks moved higher. Select information technology, oil, healthcare, power, bank and FMCG stocks too closed on a firm note. Realty stocks recovered after a sharp setback and mostly ended off their lows. Metal stocks were mostly subdued.
Mahindra & Mahindra ended 4.5% up. Bajaj Auto moved up 2.5% and Maruti Suzuki and Hero Motocorp gained 1.4% and 1.3%, respectively, while Tata Motors gained 0.9%.
BHEL and Larsen & Toubro, the capital goods sector heavyweights, gained 3.4% and 1%, respectively. Telecom stock Bharti Airtel ended with a gain of over 2.5%. Sun Pharmaceutical Industries (2.2%), Tata Power (1.7%), Reliance Industries (1.4%), HDFC (1.2%) and Infosys (1.2%) also closed on a high note. State Bank of India, Tata Steel, Tata Motors, Cipla and Coal India gained 0.4% - 1%.
Reliance Infrastructure, Axis Bank, HCL Technologies, Ultratech Cement, Ambuja Cements, IDFC, IndusInd Bank, Jaiprakash Associates, Lupin and Grasim Industries gained 0.5% - 1.8%.
Ranbaxy Laboratories ended lower by over 3.5%. Hindalco, GAIL India, NTPC, Sesa Goa, Jindal Steel & Power and Dr Reddy's Laboratories lost 1% - 1.6%.
The market breadth was slightly positive. Out of 2432 stocks traded on BSE, 1205 stocks declined. 1091 stocks moved up and 136 stocks ended flat.