Sensex rallies on hopes RBI will hold rates, IT stocks lead

The BSE Sensex and Nifty traded with over 1.8 per cent gains in the afternoon trade on hopes that the Reserve Bank of India will keep interest rates on hold for a second consecutive month at its policy review on January 28.

The Sensex was up 404 per cent at 21,163 while Nifty rose 113 points to 6,284.

Data on Friday showed industrial output in November unexpectedly contracted, while consumer prices data due later in the day is expected to show easing inflation.

Stocks also tracked higher Asian shares after a surprisingly weak U.S. jobs report on Friday revived speculation that the Federal Reserve could keep policy loose for longer.

Foreign investors bought Indian shares worth Rs 68.1 crore on Friday, exchange data showed, after selling in four of the previous five sessions.

Software services exporters lead gains after Infosys reported better-than-expected quarterly results on Friday. Infosys, TCS and HCL Tech all posted new 52-week highs by rising 3.1 per cent, 4.3 per cent and 4 per cent respectively.

Tata Motors Ltd gained nearly 2 per cent after key unit Jaguar Land Rover sold a record volume of vehicles last year.

Shares of Indian oil and gas companies gained after the government officially notified a decision taken last year to change the pricing formula for domestic natural gas from April 1, removing the uncertainty on what effectively constitutes a price hike.

Deutsche Bank says the hike will be positive for the sector, and says Oil and Natural Gas Corp Ltd and Oil India Ltd will be the biggest beneficiaries, followed by Reliance Industries Ltd.

Shares of ONGC rose 2.5 per cent and Reliance Industries gained nearly 2 per cent, while Oil India surged 3.7 per cent.