Markets on Wednesday cheered RBI governor Raghuram Rajan's unexpected decision to maintain a status quo on interest rates with benchmark Sensex rising for the first time in 7 days and ending nearly 248 points higher on the back of heavy buying in banking, realty and auto shares.
Overall, nearly 1,500 stocks, or 6 out of every 10 traded on BSE rose, helping investor wealth rise by Rs 85000 crore.
The BSE Sensex rose by 247.72 points, or 1.20%, to 20,859.86. Also, the broad-based NSE index Nifty shot up by 78.10 points, or 1.27%, to end at 6,217.15.
RIL, HDFC and L&T lifted the 30-share Sensex where Tata Power and BHEL were among best performers in the 27 that rose.
The RBI in its mid-quarter policy review kept the repo rate on hold at 7.75 % against the market expectation of 0.25% hike. The cash reserve ratio was also kept unchanged at 4%.
After wholesale and retail inflation data came on the higher side, fears of a repo rate hike dragged down Sensex by over 714 points in previous six sessions after hitting life-time high on December 9.
"RBI's decision to hold rates and the mention to announce off-policy action if need be, suggests RBI buying time ahead of Fed's impending decision on QE tapering," said Dhananjay Sinha, Head, Institutional Research, Emkay Global Financial.
The most interest-sensitive Realty sector index gained the most by rising 3.51%. Besides, the Capital Goods sector was second best performer (2.61%), followed by Oil and Gas index (2.15%), Banking index (1.40%) and Auto index (1.73%).
In other markets, the rupee was trading a tad stronger at 61.97 versus dollar. Bond yields dropped by over 10 bps across the curve with 10-year bond yield at nearly 8.8%.
All eyes are now on the US Fed's move on tapering. The Federal Open Market Committee is expected to release its statement later today after a two-day meeting in Washington.
"...news of US taper would be something which global markets would be watching out. Fall out of this event should decide the course going forward," said Nirmal Bang Securities Senior Research Analyst (PCG) Vishal Jajoo.
Across BSE, pharma stocks attracted attention with Orchid Chemicals among the top gainers with 20% surge. Trent gained nearly 11% after the Tesco news.