Sensex surges 570 points as RBI keeps rate unchanged, lowers inflation forecast

Continuing its early upward trend, the benchmark BSE Sensex rallied by more than 570 points in late afternoon trade, as rate-sensitive stocks surged soon after the Reserve Bank kept its key policy rate unchanged.

The central bank kept the interest rate unchanged, as widely expected, but lowered inflation projection for 2018-19 to 4.7-5.1% in the first half and 4.4% in H2.

| Read: Monetary policy: RBI keeps repo rate unchanged at 6%, maintains ‘neutral’ stance

The repo rate, at which the central bank lends short-term money to banks, will continue to be 6%. The reverse repo rate, at which it borrows from banks and absorbs excess liquidity, will remain at 5.75%

The 30-share index, which had gained nearly 400 points in opening trade, made further headway to trade 570.59 points or 1.73% higher at 33,589.66 at 3.05 pm.

The barometer had lost 351.56 points in the previous session.

The wider NSE Nifty too maintained its upward march and was trading at 10,318.70 points, 190.30 points or 1.88% higher after the RBI policy announcement.

The BSE banking index was up 1.97% to 27,476.26, while the realty index rose 2.59% to 2282.01. BSE Auto index too gained 1.83% to 25,338.43.

Brokers said the RBI’s decision to keep repo rate unchanged at 6% was largely in line with market expectations and bolstered trading sentiments.

Meanwhile, all six members of the Monetary Policy Committee (MPC) noted that growth has been recovering and output gap is closing.

Among banking stocks, state-run SBI was up 3.24% to Rs 254.90, ICICI Bank gained 3.17% to Rs 276.95 and Kotak Bank was up 2.21% to Rs 1,102.

Positive global cues on fading trade war worries too supported the upmove.