A benchmark index for Indian equities markets closed 56.44 points or 0.33 percent higher on Monday on speculation that the Reserve Bank of India (RBI) may cut interest rates for the first time in three years.
The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 17,047.87 points, closed at 17,150.95 points, up 0.33 percent or 56.44 points from its previous close at 17,094.51 points.
The 50-scrip S&P CNX Nifty of the National Stock Exchange was trading 0.36 percent higher at 5,226.20 points.
There was good buying in interest rate-sensitive banking stocks on expectations of rate cuts. The country's largest lender State Bank of India gained 53.95 points or 2.44 percent and closed at Rs.2,265.40.
The RBI is scheduled to announce annual monetary policy for 2012-13 Tuesday. Banking, auto and consumer goods stocks rallied on the back of the speculation of cheaper loans with the prospects of a rate cut by the apex bank.
The BSE banking index closed at 12,028.61 points higher by 144.40 points or 1.22 percent. Auto index too gained with a rise of about 138.27 points or 1.31 percent at 10,288.94 points followed by consumer goods index which rose by 124.14 points or 1.10 percent to 10,009.30 points.
Top gainers included Tata Motors which gained 11.30 points or 3.91 percent at Rs.300.40 followed by SBI which gained 53.95 points or 2.44 percent at Rs.2,265.40. ITC gained 4.90 points or 2.07 percent at Rs.241.10, L&T grew by 19.75 points at Rs.1,301.70 and Maruti Suzuki rose by 18.65 points or 1.41 percent at Rs.1,342.
The top losers were telecom and technology stocks. Bharati Airtel's scrip at the BSE fell 5.60 points or 1.74 percent at Rs.316.85 followed by Infosys which was lower by 33.95 points or 1.41 percent at Rs.2,369.35.
Defensive pharma stocks like Sun Pharma was down by 7.05 points or 1.20 percent at Rs.579.35, FMCG Hindustan Uniliver was lower by 2.90 points or 0.68 percent at Rs. 421.20.
The midcap index of the BSE was up 50.97 points while the smallcap index was ruling 38.03 points higher.