Bank, auto stocks zoom

Sensex vaults 211 points to close above the 14,000-mark.

Investors backed the banking stocks on Tuesday, taking the benchmark BSE Sensex to its highest closing in more than two months, after the Reserve Bank kept the key interest rates unchanged.

The Sensex on Tuesday ended at 14,139.67, up 211.34 points, the first time it closed above the 14k mark since February 22. The Nifty closed above the 4,100 mark at 4,141.20, up 1.37 per cent or 56.1 points.

The banking sector was the largest gainer among the sectoral indices, on expectations that the banks' earnings would improve as a stable interest rate regime would lead on renewed lending.

The BSE Bank Index rose by about 4 per cent. State Bank of India was the biggest gainer among the 30 Sensex stocks, rising 7.05 per cent to Rs 1,135, ICICI Bank (up 3.29 per cent to Rs 947) and HDFC (up 2.54 per cent to Rs 1,712.50) were among the top 10 gainers.

The auto sector was the second biggest gainer with a rise of 1.82 per cent.

"The decision to leave the interest rates unchanged acted as a positive sentiment. But, I think, RBI will closely monitor inflation and hence this could only be a short-term sentiment. The economic growth rate is still a major worry," said Sandeep Jain, vice-president & head of sales (private client group), Ambit Capital Pvt Ltd. "The market is likely to stabilise at around 14,400-14,500-levels," he added.

With Tuesday's rise, the Sensex has gained 1,684.67 points or about 13.52 per cent since April 2, when stocks had plunged after the RBI hiked the key rates.

The auto stocks such as Maruti Udyog (up 4.30 per cent to Rs 800.40) and Tata Motors (up 3.96 per cent to Rs 746.80) were among the major gainers as the market players felt that a status quo in the interest rates would encourage more people to buy cars.

Shares of Bharti Airtel (up 4.04 per cent to Rs 875), Tata Steel (up 3.80 per cent to Rs 578.80) and Gujarat Ambuja (3.78 per cent to Rs 119.40) also rose.