The Sensex and the Nifty surged in trade as the Reserve Bank of India (RBI) cut interest rates outside the monetary policy. The country's central bank cut repo rates or rates at which it lends money to commercial banks by 0.25 basis points.
The Sensex gained a huge 520 points, at 25,583 points, while the Nifty rallied 150 points in trade. Leading the set of gainers from the Nifty and the Sensex were clearly banking stocks with the likes of ICICI Bank surging 4 per cent, SBI surging 4.53 per cent and Bank of Baroda 4 per cent.
While high beta names from the real estate sector also gained ground following the cut in interest rates. DLF, Unitech, J P Associates were some of the other gainers in trade.
Defensive stocks especially from the IT and FMCG space were subdued as investors bought heavily into high beta names selling FMCG stocks.
The capital goods sector also saw a sharp rally in trade like by names like Suzlon. Markets expect banking and capital good stocks to continue to rally in the coming days.
Meanwhile, markets across Asia were trading with gains despite sharply lower closings seen in the markets in the United States.