In a surprise move, the Reserve Bank today cut the repo rate by 0.25 per cent to 7.75 per cent with immediate effect. The cut in the rate came ahead of RBI's policy review next month and amid signs of slowing inflation and a flagging recovery. In a statement, the RBI cited lower-than-expected inflation, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target. It said, these developments have provided headroom for a shift in the monetary policy stance.
Just after the announcement by RBI, stock markets surged in opening trade. The Sensex at the Bombay Stock Exchange climbed by over 600 points to 27,948, while the Nifty at the National Stock Exchange was up 176 points to trade at 8,454.

The rupee soared by 46 paise to trade at a fresh one-month high of Rs 61.72 against the dollar in early trade. The rupee had ended four paise lower at Rs 62.18 in yesterday's trade amidst fall in crude oil prices.