Markets recover on RBI rate cut hopes

Mumbai: Equity benchmarks Sensex and Nifty rebounded on Tuesday, a day after plunging to five-month lows as investors lapped up bank and auto sector stocks with hopes that the RBI will cut repo rate to lift sagging consumer sentiment.

After swinging over 705 points during the day, the 30-share BSE index closed at 36,976.85, rising 277.01 points or 0.75 per cent.

The gauge hit a high of 37,241.77 and a low of 36,536.59. The broader 50-share Nifty ended 85.65 points or 0.79 per cent higher at 10,948.25.

The RBI Monetary Policy Committee (MPC) is scheduled to announce its third bi-monthly policy of the ongoing fiscal on Wednesday. Besides, the market also got a boost from a hint that the government might soften its stand on higher super-rich surcharge on foreign portfolio investment.

Sectorally, BSE capital goods, telecom, realty, industrials, basic materials, finance, bankex and metal indices rose up to 2.12 per cent. In contrast, BSE energy, IT, teck and oil and gas indices fell up to 0.68 per cent. Broader BSE midcap and smallcap indices followed benchmarks, rallying up to 1.72 per cent.

According to analysts, markets gained strength on the back of buying by investors ahead of key RBI policy announcement on Wednesday.

The market breadth was tilted in favour of buyers as 1,637 stocks advanced and 809 declined on the BSE.

Market recouped Monday's losses aided by broad-based buying across sectors supported by the finance minister's decision to have a discussion over foreign portfolio investment issue amid continued outflow of liquidity, said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

The Indian rupee on Tuesday fell by another 8 paise to settle at 70.81 against the US dollar. The global oil benchmark Brent crude futures were trading 0.48 per cent higher at $60.10 per barrel.