No rate hike: Sensex jumps 250 pts on Rajan's surprise move

The Indian stock market jumped up moments before the RBI announced its policy rates. RBI governor Raghuram Rajan sprang a surprise bykeeping the country’s policy interest rate on hold. Despite calling current inflation too high, RBI kepts rates unchanged citing the prospect of easing retail prices and its concerns about the weak domestic economy.

The RBI had been widely expected to lift its repo rate by 25 basis points, but instead opted to keep the country’s main lending rate at 7.75 percent.

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The benchmark BSE Sensex today surged nearly 253 points in late morning trade on buying in blue-chip stocks led by the banking sector after the RBI kept interest rates unchanged in its monetary policy review.

After a positive opening, the Sensex spurted by 252.87 points, or 1.23 per cent, to 20,865.01 at 1120 hours soon after the Reserve Bank announced its mid-quarter policy. Surprising the investors, the RBI kept key policy rate and the cash reserve ratio unchanged.

Similarly, the wide-based National Stock Exchange index Nifty rose by 81.45 points, or 1.33 per cent, to 6,220.50.

The banking sector index gained the most, rising 2 per cent to 13,052.77, followed by realty index by 1.83 per cent to 1357.17 points. Canara Bank surged 5.4 percent, SBI was up 3.2 percent, PNB gained 3.7 percent, HDFC Bank was also 1.5 percent.