Mumbai: Stocks jumped to multi-year highs on a broad buying spree, with financials fronting the surge, as investors hailed RBI's decision to raise its key lending rate, in a bid to combat inflation, while lowering short-term interest rates.
The apex bank's tightening move was widely expected as it sent the benchmark CNX Nifty to close nearly at a three-year high of 6,220.90, surging by a staggering 119.80 points, or 1.96 percent on the National Stock Exchange (NSE).
The NSE bellwether touched a high of 6,228.05 and a low of 6,079.20 in early trades, even as banking, auto, healthchare, energy, metal, capital goods and technology stocks attracted strong investment appetite.
On Tuesday, the RBI raised repo rate by 25 basis points to 7.75 percent in its second quarter monetary policy review and rolled back marginal standing facility (MSF) rate by 25 basis points to 8.75 percent to bring down inflation.
It also scaled down growth forecast to 5 percent, from 5.5 percent for 2013-14.
Overcoming initial hiccups, the market witnessed a massive spurt, as investors went on a buying frenzy after the rate hike decision, propelling key indices to close above the 6,200 level. Hectic short-covering ahead of futures and options expiry also supported the momentum.
Shares of the country's largest car-maker Maruti Suzuki India topped the gainers' list, zooming by 8 percent after stronger earnings performance. JP Associates, ICICI Bank, Indusind Bank, Axis Bank, PNB, Bank of Baroda, Tata Steel, Grasim and SBIN were the other big movers, while Ranbaxy, ITC and Bharti Airtel were the only losers from the index pack.
Turnover in the cash segment shot up to Rs 12,427.18 crore from Rs 8,917.44 crore yesterday. A total of 6,398.68 lakh shares changed hands in 59,20,901 trades, while market capitalisation stood at Rs 65,93,158 crore.
