Mumbai, Dec. 18: Stocks and bonds rallied today after the Reserve Bank of India (RBI) unexpectedly kept key rates unchanged.
The benchmark Sensex gained for the first time in seven days, rising 247.72 points.
Market circles were expecting the central bank to hike the repo rate by 25 basis points to tackle inflation.
The rally came despite apprehensions over the tapering of bond purchases by the US Federal Reserve (Fed), which is due to make an announcement later tonight.
The RBI decision had a positive impact on rate sensitive banking and realty stocks. While the BSE banking index gained 1.40 per cent, the realty index rose 3.51 per cent.
Capital goods, oil & gas and power also fared well as all the 13 sectoral indices ended in the green.
Within the 30-share Sensex, Reliance Industries, HDFC Bank and the State Bank of India provided a boost.
The Sensex opened lower at 20568.70 and gradually erased its losses.
The momentum increased after the monetary policy announcement.
The index hit an intra-day high of 20917.57 and ended at 20859.86, a rise of 247.72 points, or 1.2 per cent.
The CNX Nifty on the National Stock Exchange flared up 78.10 points, or 1.27 per cent, to close at 6217.15.
In the previous six sessions, the Sensex had plunged over 714 points, or 3.35 per cent, from its peak closing of 21326.42 on December 9.
The total market breadth was positive as 1,497 stocks finished higher, while 951 closed lower.
Key indices in Japan moved up on higher exports and a fall in the yen against the dollar. Other Asian indices were mixed ahead of the Fed’s decision.
At the bond markets, yields on the benchmark 10-year security gained around 13 basis points to end at 8.78 per cent.
However, in the forex markets, the rupee surrendered initial gains, losing eight paise to 62.09 per dollar today as worries regarding the Fed’s decision outweighed the RBI’s move.
At the inter-bank forex markets, there was demand for the greenback from importers.
Analysts feel the dollar can strengthen if the Fed announces any taper plan.
The domestic unit opened strong at 61.90 a dollar from the previous close of 62.01. It climbed to 61.77 after the monetary policy.
However, demand for dollars saw the currency declining to a low of 62.18 before ending at 62.09, a loss of eight paise.