Sensex up 227 pts as rate cut hopes aid

The BSE Sensex rose for a fourth straight day today, closing at their highest level in more than a month as expectations of a rate cut at the Reserve Bank of India's (RBI) upcoming annual monetary policy review continued to keep sentiment bullish. Shares were also buoyed by positive global sentiment on hopes major central banks will ease monetary policy further or continue to keep it loose for long.

The weak inflation print in March and the recent declines in oil and gold prices have stoked hopes of at least a 25 basis point cut in benchmark interest rates at the RBI's annual policy review on May 3.

"If the current rally has to sustain, good news has to come in from the RBI policy. Monsoon forecast would also add to the current growth versus slowdown conundrum," said Deven Choksey, managing director, KR Choksey Securities. "Political uncertainty would, however, remain a joker in the pack," he added.

The benchmark BSE index rose 1.2 per cent, or 227.49 points, to 19,406.85, its highest close since March 15. The broader NSE index rose 1.4 per cent, or 79.40 points, to 5,916.30, its highest closing level since March 11. Asian shares rose with recovering commodities and views that a run of weak global economic data will encourage major central banks to keep or deepen their monetary stimulus improving risk sentiment, but weak data undermined the dollar.

Dr Reddy's Laboratories Ltd gained as much as 5.2 per cent to an all-time high of Rs 2,000 before closing up 4.8 per cent on hopes growth in the domestic market would remain strong. Other pharmaceutical firms also gained with Lupin Ltd closing up 1.7 per cent and Sun Pharmaceutical Industries Ltd ending higher 3.1 per cent. Idea Cellular Ltd gained as much as 4.2 per cent on expectations earnings for the January-March quarter due after market hours would beat estimates, but later gave up gains to close 1.4 per cent higher.