Oct 4 Indian shares rose for a third straight
session on Tuesday, after the newly-appointed monetary policy
committee delivered its first rate decision, a surprise
25-basis-points cut in the repo rate, with bank stocks leading
The Reserve Bank of India said all six members of the
monetary policy committee voted in favour of a cut in the repo
rate which, at 6.25 percent now, is at its lowest
since November 2010.
Analysts had braced for a close vote. About 60 percent of
analysts polled by Reuters had expected the central bank to keep
the repo rate unchanged, while 40 percent had forecast a cut.
"Today's rate cut will boost sentiment and contribute
towards reinvigorating growth impulses in the infrastructure,
construction and manufacturing sectors," said Rana Kapoor, CEO
at Yes Bank in Mumbai.
Following the rate cut, the broader NSE index rose
as much as 0.52 percent before ending 0.36 percent higher at
8,769.15. The benchmark BSE index closed up 0.32
percent at 28,334.55.
Banking stocks gained, with the Nifty bank index,
closing 0.43 percent higher after rising as much as 0.81 percent
immediately after the rate decision.
The Nifty Midcap 100 Index and the Nifty
Smallcap 100 Index extended gains for the third
straight session, closing up 0.87 percent and 0.48 percent,
Meanwhile, the rupee strengthened to as much as
66.38 per dollar, its highest level since Sept. 7, versus
Monday's close of 66.585.
The new 10-year benchmark bond yield dropped
as much as 3 basis points on the day to 6.75 percent after the
policy decision. It had closed at 6.77 percent on Monday.
"While today's rate cut would accentuate the bond rally, I
don't see much impact on bank lending rates," said Rupa Rege
Nitsure, chief group economist at L&T Finance Holdings.
For the midday report, click
(Reporting by Darshana Sankararaman; Editing by Sunil Nair)