A surprise cut in key lending rates by the Reserve Bank of India sent the Sensex soaring to touch the 30,000-mark for the first time in history.
The NSE's Nifty also raced to an all-time high as traders welcomed the central bank's decision that signalled a concurrence with the government estimates on growth and also for the impetus it would bring to industrial growth.
At 10:15am, the Sensex was trading at 29,890, while Nifty was at 9,081.55 points, gains of 1% and 0.95% respectively. Leading the rally on the Sensex were Tata Motors (up 2.3%), ICICI Bank (up 2.1%), ITC (up 2%), SBI (a gain of 1.8%).
The 50-share Nifty opened trade on Wednesday 120 points higher at 9,116, while the BSE benchmark Sensex soared 431 points within 10 minutes of opening to 30,015 points, crossing the record 30,000-mark.
The Sensex opened at 29,937 points, much above the previous close of 29,590 points and raced to a high of 30,024.74 about 5 minutes later.
The stocks which are trading down are Coal India (down 0.8%), Hindalco (down 0.8%) and GAIL (0.6%).
In an early morning announcement, the RBI said it has cut the repo rate by 25 basis points to 7.5% while it left the cash reserve ratio unchanged.
"The uncertainties surrounding any inflation projection are not insignificant. Oil prices have firmed up in recent weeks, and significant further strengthening, perhaps as a result of unanticipated geo-political events, will alter the inflation outlook," RBI governor Raghuram Rajan said in the statement.
"It's a major positive and the markets welcome this step by the RBI as it aligns with the government's stand," said the head of a foreign brokerage. "Now it remains to be seen how this rate cut is transmitted by other banks. Corporates will now have to revive their growth plans given the fall in interest rates."
The market cap, which is an indicator of overall investor wealth, crossed Rs 107,000 crore, with the advances at a healthy 1,328 orders, whille the declines were at 756.
Elaborating on the financial outlook in his statement, RBI governor Rajan said other international commodity prices are expected to remain benign, given still-sluggish global demand conditions. "Food prices will be affected by the seasonal upturn that typically occurs ahead of the south-west monsoon and, therefore, steps the government takes on food management will be critical in determining the inflation outlook," he said.
Inflation in January 2015 at 5.1% as measured by the new index was well within the target of 8% for January 2015. Prices of vegetables declined and, hearteningly, inflation excluding food and fuel moderated in a broad-based manner to a new low.
Thus, disinflation is evolving along the path set out by the Reserve Bank in January 2014 and, in fact, at a faster pace than earlier envisaged