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The Sensex soared 412 points to a three-week high on Thursday after new RBI governor Raghuram Rajan whetted the appetite of investors with a spate of measures, including steps to boost the rupee and revive economic growth. The gains were led by banking, realty, consumer durable and PSU stocks, while information technology stocks declined.
The rupee also gained on the back of Rajan’s announcements and went up to 65.5 against the dollar in intra-day trade from Wednesday’s close of 67.07.
The index opened 290 points higher than Wednesday’s close and gained as much as 550 points to the day’s high of 19,117.52 before settling at 18,979.76, a rise of 412.21 points, or 2.22%. The Sensex was at the highest level since August 14, when it closed at 19,367.59. On Wednesday, the Sensex had gained 333 points on investor optimism over the new RBI governor.
Rajan announced plans to revise and strengthen the monetary policy framework and liberalise the markets as well as curbs on investment and position-taking.
The banking sector index rose 9.3% after Rajan raised the overseas borrowing cap for banks and said there is a need to cut investments by lenders in government securities.