Expectations of an interest rate cut in the monetary policy over cooling inflation combined with a rebound in Asian markets gave a push to the Indian equity market on Tuesday.
Accordingly, the two key indices -- Sensex and Nifty50 -- closed over 1.30 per cent higher as healthy buying was seen in IT and other interest rate-sensitive stocks.
The rise came on the back of expectations that the Reserve Bank of India (RBI) could cut key lending rates following lower retail and wholesale inflation. A decision in this regard could be taken at the RBI's Monetary Policy Committee (MPC) meeting scheduled for February 7.
Consequently, the NSE Nifty50 gained 149.20 points or 1.39 per cent to settle at 10,886.80.
The S&P BSE Sensex closed at 36,318.33 points, higher 464.77 points or 1.30 per cent from the previous close of 35,853.56.
It opened at 35,950.08 points and touched an intra-day high of 36,349.31 and a low of 35,950.08 points.
"Stock markets in India witnessed a sharp surge in today's (Tuesday) trade as benign inflation numbers at home and stimulus measures in China spurred interest in equities and encouraged investors," said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
On Monday, official data showed that India's retail inflation in December cooled to 2.19 per cent, an 18-month low, from the annual rate of 2.33 per cent in November.
"Market rallied supported by tax cut plan in China and ease in domestic CPI inflation to 2.19 per cent (December 2018)," said Vinod Nair, Head of Research, Geojit Financial Services.
"Fall in 10 year yield amid moderation in inflation provide room for RBI to ease monetary policy. Nifty IT outperformed led by revised revenue outlook. FIIs remain in selling mode due to global growth concern which will make investors stay cautious in the market."
The Indian rupee lost 11 paise to settle at 71.04 per US dollar against the previous close of 70.93, giving a push to export-oriented IT stocks that rose over 3 per cent.
Interest-sensitive stocks -- banking, auto, capital goods and finance -- gained up to 0.76 per cent. IT counters led the gains among the 19 sectors on BSE.
"Technically, with the Nifty rallying sharply higher and breaking out of the triangle pattern, the bulls seem to have an upper hand. Further upsides are likely once the immediate resistances of 10,925 are taken out," said Deepak Jasani of HDFC Securities.
"Crucial supports to watch out for any weakness are now at 10,777."
In terms of investments, FIIs bought shares worth Rs 159.60 crore, whereas DIIs bought Rs 417.44-crore stocks on Tuesday.
Stock-wise, Reliance Industries, Infosys and Yes Bank surged over 3 per cent, while Vedanta and Tata Consultancy Services gained in the range of 2 to 3 per cent.
In contrast, only 3 stocks out of the 30 on Sensex ended lower: Maruti Suzuki, ICICI Bank and Power Grid.
--IANS
ravi-rv/nir
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