The markets are betting on the Reserve Bank of India (RBI) hitting the pause button after Thursday’s widely expected 25 basis point hike in the policy repo rate to 6.75 per cent.

The likelihood of the rate hike cycle coming to an end generated an air of optimism that saw the benchmark Sensex rallying more than 582 points on the back of buying in IT and financial shares even as the benchmark 10-year bond closed lower at 7.27 per cent against the previous finish of 7.31 per cent.

RBI’s interest rate-setting body — the monetary policy committee (MPC) — will announce its decision on Thursday after a three-day meeting.

The panel is widely expected to again raise the repo rate to 6.75 per cent which will mean a 275-point increase since May 4 last year when it raised rates suddenly in an off-cycle event by 40 basis points to 4.40 per cent.

However, the RBI is expected to adopt a dovish stance from now on, with the view of the analysts on the matter veering towards the central bank putting an end to the tightening cycle and waiting for the increases to transmit across the various sectors of the economy.

The rate hikes have already affected affordable housing as home loans now come at around 9 per cent from the historic lows of 6.6 per cent prevailing before May last year.

Recently, The Confederation of Real Estate Developers Association of India (CREDAI) urged the central bank to pause its tightening cycle while citing the financial challenges faced by developers and the potential impact on housing sales because of the consequential rise in prices and home loan rates.

The Sensex on Wednesday opened steady at 59094.71 and inched towards the day’s high of 59747.12 — a gain of nearly 641 points — after which it shut shop at nearly a four-week high of 59689.31, rising 582.87 points.

The NSE Nifty jumped 159 points or 0.91 per cent to close above the 17550 level at 17557.05

Larsen & Toubro led the gainer’s list rising 3.96 per cent as the company announced that its hydrocarbon business has won multiple offshore packages from a prestigious company in West Asia. It was followed by the HDFC twins and others such as Sun Pharma and ITC which rose to 2.98 per cent.

Global markets were, however, mixed as Japan’s benchmark Nikkei 225 slipped 1.7 per cent, while South Korea’s Kospi rose 0.6 per cent.

Gold zooms

The gold price rallied Rs 1,025 to touch a lifetime high of Rs 61,080 per 10 grams in the national capital on Wednesday amid strong global trends, according to HDFC Securities.

In the previous trade, the precious metal had settled at Rs 60,055 per 10 grams. Silver also zoomed Rs 1,810 to Rs 73,950 per kilogramme.