Sensex, Nifty Rally As RBI Surprises With Jumbo Rate Cut
(RTTNews) - Indian shares rallied on Friday as the Reserve Bank of India (RBI) surprised the market with a 50 basis points (bps) cut in the benchmark repo rate to 5.5 percent, slashed the cash reserve ratio (CRR) by 100 basis points to 3 percent, and also trimmed its inflation forecast for the year by 30 basis points to 3.7 percent.
The CRR cut alone is estimated to release Rs. 2.5 lakh crore into the financial system and boost economic growth.
RBI governor Sanjay Malhotra said the changes in growth-inflation dynamics call for not only continuing with the policy easing but also frontloading the rate cuts to support growth.
Traders also reacted positively to new reports that suggested the U.S. and China will resume trade talks in hopes of breaking an impasse over tariffs and global supplies of rare earth minerals.
The benchmark S&P/BSE Sensex jumped 746.95 points, or 0.92 percent, to 82,188.99 while the broader NSE Nifty index closed at 25,003.05, up 252.15 points, or 1.02 percent, from its previous close.
The BSE mid-cap and small-cap indexes gained 0.9 percent and 0.4 percent, respectively.
The market breadth was strong on the BSE, with 2,282 shares rising while 1,741 shares declined and 133 shares closed unchanged.
Rate-sensitive stocks topped the gainers list, with Bajaj FinServ, IndusInd Bank, Maruti Suzuki India, Axis Bank and Bajaj Finance surging 2-5 percent.
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