Global cues help sensex shrug off rate hike

The BSE benchmark Sensex erased early gains today but still ended 57 points up as RBI raised key interest rate on expected lines, amid firm cues from global markets.

The stock markets rose for the third straight session on Friday, as investor appetite for risk returned on hopes that policymakers will come up with more actions to combat the European debt crisis, helping the Bombay Stock Exchange shrug off the rate increase the Reserve Bank of India.

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"Our stock market is riding the global recovery and trying to make the most of it," said Arun Kejriwal, strategist at KRIS. "How long this will remain, we have to see. It can fizzle out today, it can fizzle out tomorrow," Kejriwal said.

The 30-share BSE Sensex closed up 0.34% or 57 points at 16,933.8, with 13 of its components ending higher.

The index has fallen 17.4% since the start of 2011, but ended the week 0.4% higher, their third straight weekly gain, after falling for five consecutive weeks.

"Banking stocks should revive, there was fear of a higger hike, that has not materialised. And the stocks have been beaten down significantly," said Sailav Kaji, director Institutional Equities & Chief Strategist, Padmakshi Financial Services.