Stocks come alive on RBI rate cut, end week with solid gains

Mumbai: Domestic market ended the truncated week on a note of optimism, with the 50 bps rate cut by RBI leading to sizeable gains, helping the BSE Sensex reclaim the psychological 26,000-mark and the broader Nifty end above the crucial 7,900-level.

The week started on a dismal note as investor sentiment warranted support against the backdrop of an uncertain global financial scenario coupled with India's unimpressive IIP and export figures.

The market perked up when RBI chief Raghuram Rajan in the fourth bi-monthly policy review surprised financial markets by announcing a bigger-than-expected cut in the repo rate by 50 basis points to 6.75 per cent. He also allowed a steady increase in foreign investment limit in government securities.

Investors renewed buying as stocks rallied amid growth optimism, which got some support from a strengthening rupee and a turnaround in global stocks despite lingering uncertainty. But the buoyancy was tempered by a long weekend as the market remained closed on Friday on account of Gandhi Jayanti, drop in manufacturing PMI and hints of a US Fed rate hike by its Chairman Janet Yellen at the end of the year.

The Sensex resumed higher at 25,922.71 and hovered in a range of 26,431.80 and 25,287.33, before concluding the week at 26,220.95, up 357.45 points, or 1.38 per cent. The 50-share Nifty also added 82.40 points, or 1.05 per cent, to close at 7,950.90.

Buying was led by consumer durables, realty, FMCG, healthcare, power, capital goods, technology, IT and PSU sectors, which was also supported by shares from mid-cap and small-cap companies, while metal, banking and auto counters saw some profit booking.