MUMBAI: Snapping five-session losing streak, the benchmark BSE Sensex on Tuesday surged by 221 points with rate sensitive stocks attracting buying support in the aftermath of retail inflation easing to 30-month low of 7.31 per cent.

Brokers said softening of inflation has sparked off hope that the Reserve Bank will cut interest rate at its policy review next month.

While retail inflation in June touched its lowest mark at 7.31 per cent since January 2012, the wholesale price based index slid to four-month low of 5.43 per cent mainly because of easing prices of vegetables.

Value-based buying in many blue-chip stocks, which became attractive after recent losses, also helped the the barometer to close higher, brokers said.

The 30-share Sensex gained 221.67 points, or 0.89 per cent, to end the day at 25,228.65.

The surge comes for index comes after losing 1,093 points in the previous five sessions.