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Sensex surges over 300 pts after RBI policy outcome; financial stocks gain

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Mumbai, Oct 9 (PTI) Extending intra-day gains, equity benchmark Sensex surged over 300 points in the afternoon session on Friday after the Reserve Bank of India (RBI) left benchmark rate unchanged but decided to maintain an accommodative stance.

The central bank's Monetary Policy Commitee's decision implies rate cuts are possible in the future if the need arises to support the economy hit by the COVID-19 crisis.

After announcement of the monetary policy review, the 30-share BSE index sustained and added to early gains to trade 303.63 points or 0.76 per cent higher at 40,486.30, and the NSE Nifty rose 77.35 points or 0.65 per cent to 11,911.95 in the afternoon session.

L&T was the top gainer in the Sensex pack, rising around 3 per cent, followed by HDFC twins, ICICI Bank, Axis Bank, ONGC and SBI.

On the other hand, Nestle India, Asian Paints, Sun Pharma, UltraTech Cement, HUL and Bajaj Auto were among the laggards.

Rate-sensitive banking and financial stocks were trading on a positive note, with BSE bankex and finance rising up to 1.77 per cent, while realty and auto indices were in the red.

The policy review outcome was as per expectations, but it was the good commentary on GDP outlook and the liquidity measures announced that cheered the D-Street, said Jimeet Modi, Founder and CEO of Samco Group.

'All these proactive measures undertaken by the Indian central bank to revive growth and stimulate the economy will go down well with capital markets,' he added.

The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, RBI Governor Shaktikanta Das said while announcing the MPC decisions.

Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.

Das said the Indian economy is entering into a decisive phase in the fight against coronavirus.

He also stated that the contraction in economic growth witnessed in the April-June quarter of the fiscal is 'behind us', adding that GDP was likely to turn positive at 0.5 per cent in the January-March quarter of the current financial year. PTI ANS RAM