A bigger-than-expected policy rate cut by RBI no doubt cheered the Street, but was just not enough for a big-bang finish as the BSE benchmark Sensex ended 162 points up amid inherent weakness and mixed global cues.
The NSE Nifty rose 48 points, recapturing the 7,800-mark.
Rate-sensitives, especially bank and real estate stocks, were the star of the day, which drove the benchmarks higher.
But it was late sell-off in healthcare and metal stocks that slammed brakes on the gains, which at one point went up to over 750 points from the session's low.
Providing the much-needed relief to consumers and companies alike, Reserve Bank Governor Raghuram Rajan today pulled off a surprise by cutting the repo rate by 50 bps to 6.75 per cent as against an expected 25 bps reduction.
The apex bank also hiked limit for FPI investment in government bonds to 5 per cent of the outstanding stock by March 2018, a move that will plough in an additional Rs 1.2 lakh crore in G-secs.
Just prior to the policy announcement, the BSE Sensex was trading down by over 1 per cent, but quickly covered all the losses before closing the day at 25,778.66, up 161.82 points, or 0.63 per cent.
Similarly, the NSE Nifty settled higher by 47.60 points, or 0.61 per cent, to sign off at 7,843.30.
"Indices cheered on a 50 bps repo rate cut by RBI in its monetary policy review today. However, indices could not sustain gains and halve them in the late trade due to weak global cues," said Gaurav Jain, Director, Hem Securities.
The markets took encouragement from the rupee as well, which firmed up against the dollar, perking up mood.
But what came as a reality check was RBI's lowering of real GDP forecast for 2015-16 to 7.4 per cent, from its earlier projection of 7.6 per cent.
For now, the investor attention shifts to a set of economic indicators, including the final reading of China's Purchasing Managers' Index and US non-farm payrolls data.
On the gainers' chart, HDFC, Maruti Suzuki, M&M, Coal India and L&T led the way.
In terms of sectors, BSE realty gained the most surging 1.99 per cent, followed by banking, auto, capital goods and power.
Global cues remained largely negative on anaemic global growth conditions amid a downturn in China and uncertainty over the timing of a Fed rate hike.
European equities were hovering near their 2015 lows in early trade.
Meanwhile, foreign investors net sold shares worth Rs 650 crore yesterday, provisional data showed.
