BSE Sensex and Nifty rose nearly 0.70 per cent today to mark their highest ever close as the Reserve Bank of India (RBI) governor Raghuram Rajan today eased rules to spur bank lending and toned down his stance on inflation.
The RBI, which kept interest rates on hold at 8 per cent as widely expected, also hinted it would not raise rates as long as inflationary pressures continued to ease.
The governor's dovish tone on inflation sparked also a rally in bonds and raised expectations the central bank could even ease monetary policy as early as this year. The RBI also announced a reduction in the mandatory amount of bonds lenders must park at the central bank - called the statutory liquidity ratio (SLR) - by 50 basis points to 22.5 per cent of deposits, starting in mid-June.
The Sensex ended 173 points higher at 24,858 while Nifty closed at 7,415, up 53 points.
Metal stocks were the biggest gainer today with the BSE metal index rising over 5 per cent on positive China manufacturing data. Tata Steel and Sesa Sterlite rose over 6 per cent each.
Banking stocks mostly ended flat on profit-taking after the Bank Nifty rose close to 1 per cent soon after the RBI announced its monetary policy. (With Reuters Inputs)
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