Sensex closes 685 points higher at 73,067 ahead of the RBI decision

The Sensex closed on Tuesday at 73,067.81, up 685.34 points, or 0.95 percent. It had opened at 72,508.05. The Nifty 50 finished at 22,776.10, up 219.35 points, or 0.98 percent. India Today's closing bell put banking and financial stocks at the front of the rise. Trent ended the session up 13 percent, the sharpest large move in the retail names.

The session sits on the eve of a Reserve Bank policy decision. The monetary policy committee meets with a market that, on the India Today account, is priced for a 25 basis point increase. A hike of that size would be the first change after a long hold, and the commentary on inflation and growth is what dealers said they would read. A 25 point move that is already expected moves the rate. A line in the statement that points to another increase moves the multiple.

Bank stocks led because a higher policy rate lifts the lending rates that float, while deposit growth is still being described as strong. That is a margin story, not a credit story. It lasts until the statement says otherwise. If the committee holds, the same bank rally has to be unwound against a market that came in expecting the hike.

Thursday brings the other date. Tata Consultancy Services is due to report September-quarter earnings, the opening print of the season. After a correction, the question the close is asking is whether domestic activity is showing up in company numbers. TCS will not answer that for banks or for Trent. It will answer it for the part of the index that sells software in dollars.

The two indices did not quite match. The Sensex gain of 0.95 percent and the Nifty gain of 0.98 percent are close, which is what a broad session looks like. A 13 percent move in Trent is not broad. It is a single stock repricing, and it should not be read as the reason the Nifty crossed 22,700. The reason the tape gave was banks.

Levels worth keeping: open 72,508.05, close 73,067.81, Nifty close 22,776.10. The morning quote on some business wires, a Sensex near 72,382, was not the close. Anyone using the morning figure as the day will be about 685 points light.

Wednesday's decision is the next print that can erase Tuesday. A hike with a quiet statement leaves the close intact. A hold, or a hike with a warning on growth, does not. The 685 points are real for one session. They are not a trend until the committee has spoken and TCS has printed.

Trent's 13 percent is the outlier a retail investor will remember. The index math will remember the banks. Both can be true on a day when the benchmark rose just under 1 percent and one retailer rose by a double digit. The policy rate is the variable that decides which of those moves is still there on Thursday morning.

A 25 basis point hike, if it comes, is 0.25 on the policy rate. On a floating loan it is a small monthly change and a signal. Dealers who bought banks on Tuesday were buying the signal. They were also buying the chance that the statement stops at one hike. A second hike pencilled into the commentary would cap the margin story that carried the financials.

Trent's 13 percent needs a separate line from the index. A retailer moving that far on a day the benchmark rose under 1 percent is a stock event. The closing bell named it because of the size, not because it explained the 685 points. Those points came with the banks, on a tape that opened at 72,508.05 and finished at 73,067.81.

The next two sessions have owners. Wednesday belongs to the committee. Thursday belongs to TCS and to whatever the statement did to the rupee and the bank book. Tuesday's close is the level both of those events will be measured against. 22,776.10 on the Nifty is that level.