Monetary policy easing in China buoyed global sentiment and took with it the Nifty and the Sensex to new highs.

The Nifty rounded off Monday at 8,530, up 53 points or 0.62 per cent over the previous close. The Sensex peaked at 28,542 before closing at 28,500, up 165 points or 0.58 per cent.

After market hours on Friday, the Chinese central bank announced a 40 basis point rate cut on its one-year benchmark lending rate to 5.6 per cent.

This was widely interpreted as a response to the government’s fear of flagging growth and brought cheer to global markets.

FIIs were net buyers on Monday to the tune of ₹407.42 crore, while DIIs sold net equity amounting ₹162.78 crore. Retail investors on the BSE offloaded net equities worth ₹108 crore.

Vinod Nair, Head of Fundamental Research, Geojit BNP Paribas Financial Services, said bank stocks moved up in anticipation of a rate cut by the RBI while IT stocks will benefit from a favourable exchange rate.

Lower rate phase

“China cutting rates in spite of the US Federal Reserve (doing the opposite) indicates that India (even if not immediately) is likely to enter a phase of lower rate in FY15. The cut in rates by China has helped metal stocks move higher, on expectations of support in international prices,” Nair added.

Among sectoral indices, metals, IT and banks gained the most. India Vix was down six per cent closing at 13.0175.

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