Markets gain on repo rate, CRR cut hopes

Key benchmark indices closed higher on Friday led by rate sensitive shares, on renewed hopes that the RBI on Monday will cut key policy rates and also lower the cash reserve ratio to boost growth and liquidity.

The 30-share Sensex ended down up 272 points or 1.6% at 16,950 and the S&P CNX Nifty gained 84 points or 1.7% to close at 5,139.

Earlier in the day, the markets opened higher owing to firm Asian cues. However, amidst volatility the BSE benchmark index touched a low of 16,701 only to recover. Later, the markets edged higher in late noon trades, amid firm European cues, with rate-sensitive shares leading the gains.

In the broader markets, both the midcap and the smallcap indices, up 0.6% each underperformed the Sensex which gained 1.6%.

On the global front, world shares rose and the euro hovered near a three-week high on Friday, lifted by central bank preparations for coordinated liquidity operations in the event of a credit shock after Sunday's Greek election.

Expectations of more monetary stimulus were also boosted by a British plan to flood its recession-hit economy with cash, and after economic data in the United States rekindled talk of more Fed easing. But the Bank of Japan left its policy unchanged on Friday after a two-day meeting.

Markets across Asia closed higher. The top gainers were Hang Seng up 2% followed by Straits Times and Taiwan Weighted which ended up 1% each.

European shares continued to trade firm with the CAC-40, DAX and FTSE-100 up 0.6-1 %.

Back home, all the sectoral indices closed in the positive zone. BSE Auto and Bankex indices surged 2% each followed by counters like Realty, Capital Goods, FMCG , Power, Metal, IT and Healthcare all gaining by 1% each.

Rate sensitives gained ahead on the likelihood of a rate cut by the RBI in its mid-quarter policy review. ICICI Bank and HDFC Bank up 2.5-3% were the major gainers in the banking space.

In the Auto space, Tata Motors surged over 5% and was the top Sensex gainer after its chairman, Ratan Tata, bought 425,000 shares through open market transaction. Moreover, Tata Motors today said its global sales grew 12% in May. Among other Auto shares, Hero Moto, M&M and Maruti Suzuki gained between 2-3%.

Other notable gainers included Coal India, Hindalco, Sun Pharma, Bharti Airtel, TCS, Hindustan Unilever, L&T and Tata Power up 2-3%.

Sterlite Industries and Bajaj Auto down 1.5% each and ONGC down 0.7% were the only losers among the Sensex-30.

Shares of cement makers continued their upward march. Grasim Industries, India Cements, Dalmia Cement Bharat and Kesoram Industries rallied more than 5% each, while Ambuja Cements, ACC and UltraTech Cement up between 2-3% were the prominent gainers.

Overall breadth was positive as 1,523 stocks advanced while 1,169 declined on the BSE.