Sensex rises over 400 points, Nifty at 10,264 ahead of RBI policy meeting as fears of US-China tariff war ease

The Sensex and Nifty recovered in early morning trade on positive global cues as fears of a trade war between the US and China eased on sign of dialogue. Banking stocks were trading higher ahead of the RBI's first FY19 policy meeting announcement later in the day today.

While the Sensex rose 408 points to 33,427, Nifty was up 136 points to 10,264 points. Tata Motors (3.06%), Tata Steel (2.47%) and Adani Ports (2.45%) were the top Sensex gainers. 28 stocks on the Sensex were trading in the green except Bharti Airtel and ITC which fell 0.63% and 0.08% , respectively.

"The recent strength of the economy has belatedly shifted discussion from whether the RBI might cut policy rates again to whether it should hike," noted Shilan Shah, senior India economist at Capital Economics.

Among BSE sectoral indexes, auto stocks (1.53%), banking (1.18%) and metal stocks (2.53%) were the top gainers.

All sectoral indexes were trading in the green except the telecom index which fell 0.05%.

"We expect the policy guidance and tone to be balanced and similar to that in February," said A. Prasanna, chief economist at ICICI Securities Primary Dealership, referring to the RBI's projection that inflation will moderate from October onward but with upside risks.

The BSE midcap index (1.33%), small cap (1.58%) led the benchmark indexes higher.

Market breadth was positive with 1636 stocks rising against 275 falling on BSE. 49 stocks were unchanged.

The rupee rose by 15 paise to 65 against the dollar at the interbank forex market on fresh selling of the greenback by exporters and banks.

Dealers said dollar's weakness against some other currencies overseas and early gains in domestic equity markets supported the rupee.

Yesterday, the rupee fell 14 paise to end at 65.15 against the US dollar. 

Global markets

Japan's Nikkei 225 surged 1.6 percent to 21,667.83 and South Korea's Kospi jumped 1.5 percent to 2,442.40. Australia's S&P/ASX 200 advanced 0.7 percent to 5,803.50. Stocks in Singapore surged and markets in other Southeast Asian countries were also higher. Markets in mainland China and Hong Kong were closed for holidays.

US stock markets finished higher on Wednesday after a sharp plunge in the previous session. The Dow Jones industrial average advanced 1 percent to 24,264.30. The S&P 500 index climbed 1.2 percent to 2,644.69. The Nasdaq composite rose 1.5 percent to 7,042.11. The Russell 2000 index of smaller-company stocks gained 1.3 percent to 1,531.66.