The BSE benchmark Sensex rallied by over 186 points in late morning trade soon after RBI announced a cut in cash reserve ratio (CRR) in its monetary policy review.
After rising over 83 points in early trade, the 30-share index rallied further to trade 186.05 points, or over 1 per cent higher at 16,937.78 points at 1130 hrs.
All the sectoral indices were trading in the positive zone with gains up to 1.93 per cent.
Leading the rally, the banking index rose by 1.93 per cent as State Bank of India went up by 2.29 per cent to Rs 1,985 and ICICI Bank gained 2.59 per cent to Rs. 880. HDFC Bank was up by 0.64 per cent to Rs 487.
The broad-based National Stock Exchange index Nifty regained 5,100—point level by rising 56.35 points, or 1.12 per cent to 5,102.60 points.
Brokers said the cut in cash reserve ratio by 0.50 percentage point to 5.5 per cent buoyed the trading sentiments as it would infuse additional Rs. 32,000 crore liquidity into the system.
Through the multiplier effect, additional credit to the tune of Rs 1.6 lakh crore would be generated in the system over a period of time