Stock markets on Monday rose to their 11-week high on rising hopes of Reserve Bank of India cutting rates by as much as 50 basis points next month after the government slashed the retail small savings rates last week.
The 30-share Sensex crossed the 25,000-mark again, advanced to a high of 25,327.45 and ended up 332.63 points, or 1.33 per cent, at 25,285.37, its highest closing since January 6. The gauge had gained 275.37 points on Friday as foreign funds continued to pump in money amid a firm global trend after the Fed indicated a slower pace of rate increases in coming days.
The 50-share Nifty regained the 7,700-mark and ended at 7,704.25, up 99.90 points, or 1.31 per cent.
On Friday, the government slashed interest rates on all small savings schemes, including PPF, Kisan Vikas Patra (KVP) and senior citizen deposits, to make them more market aligned. Interest rate on Public Provident Fund (PPF) scheme has been cut to 8.1 per cent for the period April 1 to June 30, from 8.7 per cent, at present. Similarly, the interest rate on KVP will be reduced to 7.8 per cent from 8.7 per cent while senior citizen savings scheme of five years would earn 8.6 per cent interest compared with 9.3 per cent.
Dipen Shah, Senior Vice-President, Kotak Securities, said, “Nifty closed above the 7700 mark for the first time since early January. The rise in markets came on the back of supportive global cues and increased expectations of a rate cut by the RBI. Going ahead, RBI rate cut, quarterly results and legislative action in the second half of the budget session will be the important triggers for the markets, apart from the global cues.”
Jayant Manglik, president, retail distribution, Religare Securities, said: “The mood was upbeat from the beginning as the government’s latest stance of slashing the retail savings rate has strengthened the possibility of a rate cut by the RBI next month. Positive FII figures and appreciation in rupee further added to momentum. Rate sensitive pack viz. banks, auto, realty gained maximum while IT and media settled on a flat note. We have reached closer to our target of 7800 in Nifty and expect that to be tested shortly.”