Indian shares ended at yet another record high on Monday as State Bank of India (SBI), India's biggest lender surged 4.5 per cent after it introduced a 2-tier savings bank interest rate while investors awaited a rate cut by the central bank later this week. The Sensex rose 205.06 points to a record closing high of 32,514.94 while the Nifty settled 62.60 points higher at 10,077.10 led by buying in banking shares. The Nifty PSU Bank index surged 3.62 per cent while the Nifty Bank, NSE's sub-index for banking shares closed 1.17 per cent higher.
The Reserve Bank of India is expected to cut interest rates when it meets on Wednesday, a Reuters poll showed, responding to an inflation rate running well below target, which had eased to its slowest pace in over five years in June.
"We expect the policy committee to lower its natural bias to be cautious and lower policy rates by 25 bps this week," said DBS Group Research in a note.
"Investors are always interested in rate cuts and have been expecting a rate cut for quite some time now," said Sunil Sharma, chief investment officer at Sanctum Wealth Management.
State Bank of India rose 4.5 per cent to Rs 312.50 after it revised its saving bank rate to 3.5 per cent from 4 per cent for deposits below Rs 1 crore. Analysts say the reduction in interest rate would reduce SBI's interest outgo and improve its profitability. Shares of other state-owned banks also rose following this development. Bank of Baroda gained 2.78 per cent, PNB rose 2.20 per cent, while Bank of India added 2.8 per cent.
Among Nifty stocks, SBI was the top gainer followed by Power Grid Corporation of India, ONGC, L&T and Bank of Baroda, which rose between 2.7-4.03 per cent.
Meanwhile, pharma stocks were the biggest hit in today's trade. Sun Pharma was the biggest loser in Nifty, down 3.47 per cent followed by Dr. Reddy's Lab and Lupin, which fell 3.31 per cent and 2.99 per cent respectively. The Nifty pharma sub-index of NSE declined 2.02 per cent, falling for a seventh session in eight. (With agency inputs)
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