Benchmark equity indices closed with gains of about 0.35 per cent on Tuesday, not responding much to the 25 basis point cut by the Monetary Policy Committee (MPC) to a six-year-low of 6.25 per cent. The mid-cap space was buzzing, with the BSE Midcap rising to a 52-week-high and closing 0.50 per cent higher to its Monday close.
Top midcap gainers included United Breweries (up 5.96 per cent), Union Bank of India (5.89 per cent), Indraprastha Gas (5.88 per cent), Jindal Steel (5.66 per cent) and Canara Bank (3.37 per cent).
Other stocks that rallied in the mid-cap space included Petronet LNG (4.06 per cent), Vedanta (4.67 per cent), GAIL (India) and Power Finance Corporation (3.03 per cent). Some of these stocks also hit a new 52-week-high on Tuesday.
The BSE Sensex closed 91 points higher at 28,334, while the NSE Nifty 50 rose 31 points to end at 8,769. Top Sensex gainers included ONGC, Tata Steel, Tata Motors and State Bank of India.
ICICI Prudential Life Insurance Company shares closed 1.84 per cent lower at Rs 304.10 apiece, much below its issue price of Rs 334 per share.
Analysts said that the rate cut announced by the six-member MPC is a wise move. "In giving the repo cut, the Monetary Policy Committee (MPC) has seized the moment provided by moderating inflation, good monsoon and the US Fed postponement of their hike," Lakshmi Iyer, Chief Investment Officer (Debt) & Head of Products, Kotak Mutual Fund, said in a statement.
Welcoming the decision, the chairman and managing director of a brokerage said there is scope for further rate cut in the near future. "We believe the rate cut was very much required for the economy, and if inflation data supports there could be another cut of 25 bps towards the end of the financial year," Dinesh Thakkar of Angel Broking said in a statement.