Sensex closes above 10K as inflation plunges

benchmark Sensex on BSE on Thursday closed above the crucial 10,000-point level for the first time in six weeks on buying sparked by a sharp fall in inflation which fuelled hopes of cut in lending rates amid anticipation of a second stimulus package to boost the economy.

The bellwether index steadily rose, except for a brief period in the morning session, and and closed with gains of 361.14 points at 10,076.43, a level last seen on November 5.

Interest rate sensitive realty and banking shares soared 7.27 percent and 7.06 percent respectively on expectations of lending rates coming down.

Experts said with the rate of price rise declining sharply to nine-month low of 6.84 percent for the week ended December 6, the focus may shift to back growth from taming high inflation.

The wide-based National Stock Exchange index Nifty also shot up by 106.40 points at 3060.75.

Marketmen said the fall in inflation was greater than expected. They said buying got further momentum at the fag-end after the finance ministry said that falling inflation rate would result in further lowering of interest rates.

Reports of government raising the cap for tax rebate on interest paid on home loans in the second stimulus package made realty stocks attractive.