Sensex at record closing high as RBI cuts SLR

Mumbai: The BSE benchmark Sensex jumped by nearly 174 points to end the day at all-time closing high of 24,858.59 as sentiment remained positive after the RBI pleased markets by unlocking about Rs 40,000 crore of banking funds by cutting the statutory liquidity ratio (SLR).

Boosting investor sentiment, The Reserve Bank of India (RBI) also allowed foreign portfolio investors to participate in the domestic exchange traded currency derivatives markets. Brokers said eight core sector industries posting a 4.2 per cent growth in April also buoyed markets.. The 30-share BSE barometer resumed the day better on firm Asian cues and moved erratically before settling at 24,858.59, a gain of 173.74 points or 0.70 per cent from its last close. As per market expectations, the RBI kept the key policy rates unchanged in the second bi-monthly monetary policy review 2014-15.

The central bank reduced SLR by 50 bps. This is the first policy review by the RBI since the new government under the leadership of Prime Minister Narendra Modi took over at the Centre. Bank counters came under selling pressure, while rate sensitive realty index jumped 3.15 per cent. It was metal stocks which hogged the limelight after surveys showed China's factory and services sectors had their best showings in many months in May.

Tata Steel zoomed 6.69 per cent, followed by Sesa Sterlite which jumped 6.53 per cent. "RBI pleased market with SLR cut which is huge positive for realty and banks. The SLR cut has come at the right time. It shows that there is good synergy between The Finance Minister and RBI. "Market has taken the same positively....More and more inflow will come in anticipation of robust budget. PSU stocks are getting more attractive after PMO decided that PSUs be brought under one umbrella," said  Kishor P Ostwal, CMD, CNI Research.