UPDATE FOR OCTOBER 20
Central bank's repo rate cut provided a much needed respite
rallyto the investors which have seen a massive erosion in
their wealthin the past few days. The volatility was high and
the marketbreadth was weak, indicating a cautious undertone.
The BSE Sensexrose 247.74 points or 2.48%. Firm Asian and
European marketsprovided added support to domestic bourses.
Fall in interest rate boosts stocks as it results in lowerborrowing
costs for corporates. The Reserve Bank of India (RBI),today,
cut the repo rate, by 100 basis points to 8% with immediateeffect.
Repo rate is the rate at which the RBI provides funds tobanks
against the collateral of government bonds for a day to threedays.
Banking stocks and IT stocks rose. Satyam Computer Services
andWipro rose more than 8.5% each while Tata Consultancy
Services rosemore than 9%.
Asian and European stocks were firm as investors took comfort
inglobal efforts to prop up the banking system, allowing for
somebargain hunting. Trading in US index futures suggested the
Dowwould rise 141 points at the opening bell.