Mumbai: The 30-share BSE Sensex gained as much as 226 points on Tuesday on expectations of further monetary easing by the Reserve Bank of India after a flat industrial output in April.
The BSE benchmark rose 194.79 points or 1.17 per cent, to close at 16,862.80, supported by 25 components. Meanwhile, the NSE benchmark was up 61.80 points or 1.22 per cent at 5,115.90.
After looking at just 0.1 per cent growth in industrial output for April, market experts and bankers expect 50 basis points cut in repo rate or 50-100 basis points cut in cash reserve ratio by RBI in its mid-quarter policy review on June 18.
Even the pressure has been mounted on the RBI for further rate cut after the warning of investment downgrade by rating agency Standard & Poor's and sluggish growth in GDP for fourth quarter of FY12 .
In the previous policy meet on April 17, the central bank had cut repo rate by 50 basis points to 8% and said there would less room for more cuts going forward. However, this time experts feel the RBI has to take some action to revive slowing economic growth.
Nilesh Shah, MD & CEO, Envision Capital said that the market is poised to rally only if the RBI surprises the street with a 50 basis points (bps) cut as a reduction of 25 bps is already factored in the market. He believes that the upside, however, is capped at 5200-5250 but beyond that only solid earnings could push it higher.
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