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Our Bureau

Rate hike fails to dampen the sentiment, as measures were largely in line with market expectations

Mumbai , July 25

Markets continued their upward rally on Tuesday with support from global markets and good corporate results. The RBI's monetary policy failed to dampen the sentiment, as the measures were largely along market expectations.

The BSE-30 Sensex gained 200.24 points or 1.96 per cent to end at 10,415.61 points, as the RBI raised key interest rates by 25 basis points as a means to curb inflation due to the soaring oil prices.

All sectoral indices gained, with the BSE Bankex index being the biggest gainer at 4,569.30 points, up by 4.12 per cent.

"The RBI policy statement was hawkish to maintain price stability and we will see interest rates going down in the future," said Mr S. Prabhu, Head - Fixed Income Markets, IDBI Capital Market Services Ltd.

Mr Vishal Goel, Banking Analyst at Edelweiss Securities, said, "Banking stocks under-performed at around 40 per cent for a year, but now the data on GDP growth and credit growth seems encouraging leading to their positive rally."

ICICI Bank was one of the major gainers on the BSE (up by 5.09 per cent at Rs 541.10) along with HDFC Bank (up by 4.76 per cent at Rs 763.90).

Other banking stocks like Union Bank (up by 7.05 per cent at Rs 95.60) and UTI Bank (up by 6.92 per cent at Rs 295.20) also gained.

"The hike was in line with market expectations and banks have made provisions to protect themselves from higher interest rates. The rally for stocks on Tuesday was in continuation to Monday," said Ms Shahina Mukadam, Head - Research, IDBI Capital Market Services Ltd.

The National Stock Exchange's (NSE) S&P CNX Nifty gained 1.83 per cent to close at 3,040.50 points.

However, Tuesday's upward rally was also supported by strong global markets. "Markets are taking a temporary change and the continuation of upward rally will continue only if they sustain the upward trend for three-four days," said Mr Bhavesh Vakharia, Head - Retail Dealing, Parag Parikh Financial Advisory Services Ltd.

Major buyers on Tuesday included FIIs and institutions. FIIs were net buyers to the tune of Rs 93.41 crore, according to provisional figures on the NSE.

The overall market breadth was positive with 1,644 stocks advancing and 748 stocks declining.

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