Sensex, Nifty hold ground after RBI monetary policy; banks top gainers

Mumbai: The BSE Sensex today closed about 81 points higher at 31,271.28 after the Reserve Bank maintained status quo on policy rates, resulting in gains for rate-sensitive sectors like banking, realty and auto.The Met department's revised forecast on monsoon and strengthening rupee also bolstered the domestic equities.The central bank left lending rates unchanged citing risks to inflation due to spurt in farm loan waivers by states but raised lending capacity of banks to support economic growth.[caption id="attachment_2418348" align="alignleft" width="380"] Reuters[/caption]RBI Governor Urjit Patel-led MPC for the fourth straight time kept the repo rate unchanged at 6.25 percent. The reverse repo has been kept at 6 percent.The BSE Sensex took off on a positive note at 31,252.71 and advanced to 31,346.99. Later on profit booking, it slipped to touch a low 31,172.98 before ending 80.72 points, or 0.26 percent, higher at 31,271.28. The gauge had lost 118.93 points in the previous session.The NSE Nifty after shuttling between 9,678.55 and 9,630.55, finally settled 26.75 points, or 28 percent, higher at 9,663.90.Brokers said the RBI's decision to keep key interest rate unchanged was largely in line with investor expectations.The central bank left the cash reserve ratio static at 4 percent.Banking index surged 0.73 percent as shares of state-run SBI rose 1.22 percent to Rs 290.75, followed by ICICI Bank 1.91 percent to Rs 324.75, Axis Bank 0.58 percent to 513.30 and HDFC Bank 0.10 percent to Rs 1,640.55.The central bank has, however, slashed the Statutory Liquidity Ratio (SLR) or the percentage of deposits that banks have to park in government securities, by 0.5 percent to 20 percent. The move is expected to raise buoyancy in the loans market as banks would have slightly higher funds for lending.The central bank also cut growth projection for the current fiscal to 7.3 percent from 7.4 percent.The RBI projected inflation in 2-3.5 percent range for the first half of 2017-18 and 3.5-4.5 percent for the second half.