Buoyed by the RBI’s status quo on policy rates and a revised estimate of a good monsoon, the BSE Sensex yesterday closed almost 81 points higher at 31,271.28 with sectors like banking and auto making most of the gains, while NSE’s Nifty 50 closed higher by 27 points, or 0.28%, to 9,664.
The strengthening rupee, which closed 10 paise up at 64.33, also pepped up domestic equities. The central bank left lending rates unchanged citing risks to inflation due to spurt in farm loan waivers by states but raised lending capacity of banks to support economic growth.
RBI Governor Urjit Patel-led MPC for the fourth straight bi-monthly review kept the repo rate unchanged at 6.25%. The reverse repo has been kept at 6%.
The BSE Sensex took off on a positive note at 31,252.71 and advanced to 31,346.99. Later, on profit booking, it slipped to touch a low 31,172.98 before ending 80.72 points, or 0.26%, higher at 31,271.28. The gauge had lost 118.93 points in the previous session.
The NSE Nifty, too, followed suit. Brokers said the RBI’s decision to keep key interest rate unchanged was largely in line with investor expectations.
The central bank left the cash reserve ratio static at 4%. Banking index surged 0.73% as shares of state- run SBI rose 1.22% to Rs 290.75, followed by ICICI Bank 1.91% to Rs 324.75, Axis Bank 0.58% to 513.30 and HDFC Bank 0.10% to Rs 1,640.55. The central bank has, however, slashed the Statutory Liquidity Ratio (SLR) or the percentage of deposits that banks have to park in government securities, by 0.5% to 20%.
The move is expected to raise buoyancy in the loans market as banks would have slightly higher funds for lending. The central bank also cut growth projection for the current fiscal to 7.3% from 7.4%. RBI also projects inflation in 2-3.5% range for first half of 2017-18 and 3.5-4.5% for second half. 
Out of the 30-share Sensex pack, 21 scrips rose while 9 declined during the day. Major gainers were, Reliance 1.96 epr cent, ICICI Bank 1.91%, M&M 1.49%, Sun Pharma 1.31%, HUL 1.27%, SBI 1.22%, Maruti 1.22%, Gail 1.19%, Cipla 1.09% and Hero Motoco 0.89%. However, TCS fell by 2.97% followed by Wipro 2.10%, Infy 1.83%, Tata Motors 0.64% and Adani Ports 0.59%.
Among BSE sectoral and industry indices, Healthcare rose by 1.08%, metal 0.97%, energy 0.89%, bankex 0.73%, auto 0.70%, FMCG 0.69% and finance 0.61%, while IT fell by 1.97% and teck by 1.52%. 
Meanwhile the rupee strengthened marginally against the US dollar after Reserve Bank of India (RBI) kept key rates unchanged.
The Indian rupee closed at 64.33, up 0.15% from its Tuesday’s close of 64.43. The rupee opened at 64.49 a dollar and touched a high and a low of 64.30 and 64.52 respectively.
RBI also reduced statutory liquidity ratio by 50 basis points to 20% from 20.5%. It also maintained a neutral stand and said that premature action could lead to “disruptive policy reversals later” and damage the credibility of monetary policy.
The 10-year bond yield was trading at 6.567% compared to its previous close of 6.642%. Bond yields and prices move in opposite directions.