Mumbai: The 30-share BSE Sensex staged a remarkable performance in the second half of trade that too on an expiry day, to end at almost a three-month high backed by all sectors, barring banks.
Giving the policy a thumbs-up, Nilesh Shah of Axis Bank said, the policy is not only a 'positive' one from economy point of view, but he believes that the market will continue its upward trend based on other variables.
The Reserve Bank's 25 bps hike in repo rate was already priced in by the market but the announcement of deregulation of interest rates on savings rates played a bit of spoilsport for the banking sector.
Commenting on the banking lot, Sanju Verma of Violet Arch Capital Advisors said, most banks are a sell right now.
On the whole, market took great relief from the RBI statement stating the likelihood of a rate move at its December review is "relatively low".
And, it is this promise that will help the market find more 'visibility', said Neeraj Gambhir of Nomura India.
The rally was also on the backdrop of the upcoming European Union Summit on October 26 aimed at finding a solution to the severe debt crisis. While we closed, European markets were mixed in trade.
The Sensex rallied 315.58 points or 1.86per cent, to close at 17,254.86 led by upmove in 26 stocks while, the 50-share NSE Nifty touched the 5,200 mark for the first time since August 8, before ending up 93.25 points or 1.83per cent at 5,191.60.
According to Rajiv Anand, MD & CEO of Axis AMC, the policy has taken out the uncertainty as far as this whole rate hike; that should bring some element of positivity to the market.
"I do not think the policy itself is going to change a number either for FY12 or for that matter FY13 in any dramatic fashion. But if the market begins to believe that the investment cycle has bottomed out and that confidence is somewhere at the lows currently, in the next 3 to 6 months we should see the market break-out on the upside." In the medium term, however, he believes the market move depends on Europe.
SBI and HDFC Bank plunged 3-3.5per cent while ICICI Bank rose 0.9per cent. The BSE Bankex fell 1.2per cent.
However, the BSE Auto, IT, Oil & Gas, Metal and Capital Goods indices rallied 2-3per cent. FMCG, Realty and Power indices gained over 1per cent.
Heavyweights Reliance Industries, Infosys and L&T shot up over 3per cent. HDFC, Wipro, Sterlite Industries, Tata Motors, Tata Steel, Bajaj Auto and Maruti Suzuki rallied 3-4per cent.
M&M was the biggest gainer, surging 5.5per cent. TCS, ITC, Bharti Airtel and HUL were up 1-2per cent while BHEL declined 1per cent.
NTPC's better-than-expected performance in second quarter pushed the stock up 1.6per cent. India's largest power generation company reported a growth of 15per cent in net profit of Rs 2,424 crore year-on-year while the estimate was Rs 2,107.52 crore.
Dr Reddy's Labs gained 2.3per cent post results. Pharmaceutical firm posted better than expected increase of 7.4per cent year-on-year in consolidated net profit of Rs 308 crore for the second quarter of FY12 while the CNBC-TV18 expected at Rs 270 crore. Revenue surged 21.3per cent to Rs 2,268 crore during the same period.
The market breadth was mixed; about 1419 shares advanced as against 1390 shares declined on BSE.
Total traded turnover was more than Rs 2.66 lakh crore due to expiry session.
Indian markets will open at 4:30 pm and close at 6 pm tomorrow on the occasion of muhurat trading.
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