Mumbai : Domestic markets surged the most in nearly two weeks with Sensex surging 242 points to settle at 25,723.16 and the Nifty rising 81 points led by gains in rate-sensitive shares ahead of RBI policy meet.

Apart from easing crude oil prices, the market scripted a dramatic rebound on easing near-term worries over an imminent rate hike from the US Fed on the back of disappointing economic data as well as Portugal Central Banks’ decision to bailout troubled banks soothed concerns about a re-emergence of European debt crisis. Interest-sensitive stocks such as SBI, ICICI Bank, and Axis Bank gained about 1 per cent ahead of RBI policy outcome.

Consumer durables, realty, capital goods and auto shares were in good demand. IT shares were in the limelight after steep fall in the rupee value last week. Infosys was the top gainer from the Sensex pack today with a rise of 3.66 per cent. Wipro rose by 2.42 per cent and TCS by 0.42 per cent.

“IT, banking and auto stocks drove benchmark indices higher ahead of RBI monetary policy tomorrow. Portugal agreed to spend 4.9 billion euros to rescue Banco Espirito Santo, its largest listed bank. This provided some support to European markets,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.

The Reserve Bank of India’s will unveil its stance in the third bi-monthly monetary policy review today at 1100 IST. Most expect the RBI to maintain status quo on repo rate at 8.00%.

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