Sensex soars on CRR cut, SBI jumps 4%
For reasons ranging from progress on Europe's debt crisis to a slowly improving housing market to slightly less gridlock in Congress, the economy and the job market appear better able to withstand setbacks than they were in 2011.
A higher than expected cut in cash reserve ratio (CRR) boosted sentiments on the Dalal Street Monday. The BSE Sensex jumped over 250 points or 1.5% to 17,700 in early trade.
CRR is the amount of funds that the banks have to keep with RBI. The central bank had slashed the CRR to 4.75 per cent from 5.5 per cent, thus infusing about Rs 48,000 crore of liquidity into the banking system. This is important because a lot of liquidity would be sucked out of the banking system on account of the advance tax payments through this week.
"Markets were expecting 50 basis points of CRR cut so it is a positive surprise... Going forward, Budget would be the key decider for markets," Avinnash Gorakssakar, Founder Director of Moneyinvestments.in told NDTV Profit today.
Banking counters saw major buying in early trade. PSU lender SBI (3.15%) was the top Nifty gainer. IDFC (2.9%), Axis Bank (2.3%), PNB (2.1%) and ICICI Bank (1.7%) also saw strong gains.
Other rate sensitive counters like auto, realty and capital goods also traded higher.