Mumbai, Jun 7 (IANS): A benchmark index of Indian equities markets was trading over one percent higher in the afternoon session Thursday, after registering the sharpest rally in six month in the previous day, on positive cues from global markets and hopes of rate cuts by the central bank.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened in the positive at 16,578.01 points, was trading at 16,629.36 points in the afternoon session, up 1.06 percent or 175.06 points from its previous close at 16,454.30 points.

The benchmark Sensex had surged 2.71 percent Wednesday, the sharpest rally in percentage since early January.

The wider 50-scrip S&P CNX Nifty of the National Stock Exchange was trading 0.92 percent higher at 5,043.05 points.

Interest rate sensitive banking, real estate and auto stocks surged for the second day after the Reserve Bank of India said there was room for rate cuts.

Early this week, RBI deputy governor Subir Gokarn hinted at rate cuts, saying decline in crude oil prices in the international markets and moderating core inflation coupled with slowdown in economic growth would give some room for easing monetary policy.

The RBI is scheduled to announce first quarter review of the monetary policy on June 18.

Banking index of the BSE was up 1.58 percent, realty index was ruling 1.34 percent higher and the auto index was up 1.03 percent.