Sensex ends 149 pts up ahead of RBI policy; telecom zooms

Indian equity benchmarks continued their uptrend for the second consecutive session - the Sensex added nearly 149 points ahead of RBI policy meet tomorrow. It was looking like a consolidation day in the first half of trade but second half looked quite strong. It seemed that the market may have priced in 25 basis points hike in key rates.

Consensus estimate is that the RBI would prefer 25 basis points hike in key rates but more important would be the statement from RBI. Majority of experts say RBI may end the rate tightening tomorrow.

Goldman Sachs, in its report, said, "We think the RBI's language will still have a hawkish bias, but will importantly recognize that domestic demand, particularly investment demand has slowed considerably, and that there are headwinds to growth from the global environment." It expects the Reserve Bank of India (RBI) to hike policy rates by 25 bps on July 26.

The 30-share BSE Sensex rallied 148.99 points or 0.80%, to close at 18,871.29 and the 50-share NSE Nifty went up 46.35 points or 0.82%, to end at 5,680.30, with support from 42 stocks.

Ramit Bhasin, managing director and head of markets at RBS says although many significant macro events are yet to play out, he is 'positive' on the market.

He says that only after the Reserve Bank's rate hike cycle ends, the market will break the 5,800 levels. "The market will end the year somewhere between 20,000 and 21,000 on the Sensex and around 6,100 levels on the Nifty," he says.