The Sensex witnessed a relief rally, on Monday, as investors believed that the markets were oversold in the past few sessions. ICICI Bank Ltd led gains in bank stocks as the Reserve Bank of India (RBI) cut the repo rate for the first time since 2004 in a move that will see reduced rates.
The Sensex shot up by 247.74 points, or 2.5%, to 10,223.09. The S&P CNX Nifty Index of the National Stock Exchange gained 48.45, or 1.6%, to 3,122.80. The 100 basis point cut in repo rate to 8%, which indicates the RBI?s focus on economic growth, boosted the market sentiments. Nifty futures for October delivery gained 2.9% to 3,161. The BSE 200 Index rose 1.7% to 1,222.69. Infosys Technologies Ltd led gains in stock prices.
The rupee ended at a six-year low on concern reduced interest rates will diminish the appeal of domestic assets. The rupee may be hurt again as overseas investors are exiting emerging markets on the back of global financial crisis. The rupee declined 0.3 to 49.0125 on Monday, the lowest since 2002. Money-market rates declined in Asia and Europe. Overseas investors sold a net Rs 1,900 core of Indian equities on October 16, taking the outflow this year from shares to $11.6 billion, according to data from Sebi.