The Reserve Bank of India’s announcement to cut the cash reserve ratio by 50 basis points saw benchmark indices end Tuesday in the green.
The Nifty ended the day at 5,127.35, up 1.61 per cent or 81 points, while the Sensex closed just short of 17,000 (16,995.77), up 1.46 per cent or 244 points.
All the indices on the NSE and the BSE were in the green. Volatility was lower on Tuesday and the India Vix closed 3.25 per cent lower at 21.42.
“Though the RBI has cut CRR, it just means an infusion of Rs 32,000 crore into the system and, hence, better liquidity,” said a Head of Research of an Indian brokerage.
“But it still remains to be seen whether this translates into incremental loan offtake for banks as interest rates are already very high.”
The advances to decline ratio on the Nifty was 38:12.
L&T, IDFC, SBI, JP Associates and Hindalco were the top five Nifty movers while Grasim, Coal India, DLF, Sun Pharma and HUL were the top losers.