Market indices surged on Tuesday to close at record levels as the Reserve Bank of India (RBI) kept the indicative policy rates unchanged – as expected by the market participants -- while cutting the Statutory Liquidity Ratio (SLR) by 50 basis points.

The benchmark Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) closed at 24858.59 with a gain of 173.74 points or 0.70 per cent.

On the National Stock Exchange (NSE), the 50-share Nifty closed at 7415.85 with a gain of 53.35 points or 0.72 per cent. “RBI pleased the market with an SLR cut, which is a huge positive for realty and banks. The SLR cut has come at the right time. It shows that there is good synergy between the Finance Minister and RBI. Market has taken the same positively,” said Kishor P. Ostwal, CMD, CNI Research Ltd.

“I expect stock-specific action in coming days. More and more inflow will come in anticipation of a robust budget. PSU stocks are getting more attractive after PMO decided that PSUs be brought under one umbrella. Capital goods sector may see further buying,” Mr. Ostwal added.

“We expect the RBI will further moderate its policy stance in the next meeting without reducing rates. For Financial year 2014-15, we expect rates to moderate by 50 basis points, and G-Sec yield is likely to be about 8 per cent by fiscal end,” Mr. Shah said.

Meanwhile, the rupee closed at 59.38 per U.S. dollar on Tuesday compared to 59.15. It also touched an intra-day low of 59.42.

Keywords: SensexNiftyBSENSEstock markets

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