Stock markets rallied more than 1.35 per cent on Monday to cross the 28,000 level again, posting their biggest gains in nearly a month, as expectations of a rate cut by the Reserve Bank of India lifted lenders while auto stocks such as Maruti Suzuki rallied after reporting strong monthly sales. WATCH VIDEO: Here's What Was Proposed At The Third Meeting Of GST Council The benchmark BSE Sensex closed 377 points higher at 28,243.29. The broader NSE Nifty ended 1.47 per cent higher at 8,738.10. On September 29, domestic financial markets went into a tailspin after the Army said it had conducted “surgical strikes” on suspected militants preparing to infiltrate from Pakistan-ruled Kashmir, sendiing the Sensex plunging by 465 points. According to analysts, the rally on Dalal Street was based on expectations of a rate cut by the Reserve Bank of India on Tuesday, firm Wall Street stocks and hopes of easing of tension between India and Pakistan. They expect the RBI, backed by the newly-formed monetary policy committee (MPC), to cut the policy rate by 25 basis points at its bimonthly credit policy. “Markets made huge gains today on the back of positive close in US markets on Friday and expectations of easing of cross-border tensions. Markets will look ahead to the RBI policy meeting decision on Tuesday, where we are expecting a 25 bps cut. Going ahead, decision on GST rates, US Presidential elections and quarterly results will be the key triggers to watch out for,” said Dipen Shah, Senior Vice President, Kotak Securities. WATCH VIDEO: Explained: How Will GST Work? Jayant Manglik, President, Religare Securities, said, “the market witnessed a gap up start, tracking firm global markets and gained momentum with the news of easing geo-political tension and upbeat core sector data. Besides, report showing noticeable foreign fund inflow in equity markets in passing month, further boosted the sentiments. And lastly, growing expectation of rate cut in upcoming monetary policy review meet, added to the momentum and helped index close around the day’s high.” Maruti Suzuki India rose over 4 per cent after the company reported over 31 per cent growth in passenger vehicle sales in September. The stock gained 4.16 per cent to Rs 5,707.25, its 52-week high on the BSE. On Tuesday, all eyes will be on the new Monetary Policy Committee and their stance on interest rate will dictate the market trend. Markets will look for clarity on many issues: the strategy of the newly-appointed RBI Governor and monetary policy committee’s (MPC) action on interest rates, the stance and strategy of the RBI and MPC on liquidity, the real interest rate trajectory and MPC’s take on the system-based rate setting approach.
