BSE Sensex snaps 6-day losing streak as Raghuram Rajan's RBI pauses rate hike

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The benchmark BSE index provisionally gained 1.32 percent and the broader NSE index ended higher 1.46 percent. Reuters The benchmark BSE index provisionally gained 1.32 percent and the broader NSE index ended higher 1.46 percent. Reuters
SummaryBSE Sensex up 248 pts to close at 20,859 to snap 6-day losing streak.

Markets today cheered RBI Governor Raghuram Rajan's unexpected decision to maintain a status quo on interest rates with benchmark Sensex rising for the first time in 7 days and ending nearly 248 points higher on the back of heavy buying in banking, realty and auto shares.

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Overall, nearly 1,500 stocks, or 6 out of every 10 traded on BSE rose, helping investor wealth rise by Rs 85000 crore.

The BSE Sensex index rose by 247.72 points, or 1.20 per cent, to 20,859.86. Also, the broad-based NSE Nifty index shot up by 78.10 points, or 1.27 per cent, to end at 6,217.15.

Reliance Industries (RIL), HDFC Ltd and Larsen & Toubro (L&T) lifted the 30-share Sensex where Tata Power and Bharat Heavy Electricals Ltd (BHEL) were among best performers in the 27 that rose.

The RBI in its mid-quarter policy review kept the repo rate on hold at 7.75 per cent against the market expectation of 0.25 per cent hike. The cash reserve ratio was also kept unchanged at 4 per cent.

After wholesale and retail inflation data came on the higher side, fears of a repo rate hike dragged down Sensex by over 714 points in previous six sessions after hitting life-time high on December 9.

"RBI's decision to hold rates and the mention to announce off-policy action if need be, suggests RBI buying time ahead of Fed's impending decision on QE tapering," said Dhananjay Sinha, Head, Institutional Research, Emkay Global Financial.

The most interest-sensitive Realty sector index gained the most by rising 3.51 per cent. Besides, the Capital Goods sector was second best performer (2.61 per cent), followed by Oil and Gas index (2.15 per cent), Banking index (1.40 per cent) and Auto index (1.73 per cent).

In other markets, the rupee was trading a tad stronger at 61.97 versus dollar. Bond yields dropped by over 10 bps across the curve with 10-year bond yield at nearly 8.8 per cent.

All eyes are now on the US Fed's move on tapering. The Federal Open Market Committee is expected to release its statement later today after a two-day meeting in Washington.

"...news of US taper would be something which global markets would be watching out. Fall out of this event should

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