Sensex hits 45k, Nifty crosses 13,200 as RBI announces monetary policies

As reported by Reuters, Indian shares paced up on Friday, in anticipation of a central bank decision that would potentially leave interest rates unchanged to deal with high inflation and a slowing economic contraction, and this estimation has been proven true. All 53 analysts and economists in a Reuters poll conducted in November said they do are not forecasting any difference in rates at the three-day policy meeting ending Friday, with the next rate cut now seen in the April-June quarter. Reserve Bank of India (RBI) has kept the repo rate unchanged at 4% and reverse repo rate remains unchanged at 3.35%. It has maintained an accommodative stance. As of 10:48 am Sensex had hit 45K and Nifty crosses 13,200 standing at 13,239 and marking another record.

The benchmark indexes have registered record highs for 10 of the last 17 sessions, further pushed by new developments in the production of a working COVID-19 vaccine. They added more than 11% in November on record inflows from foreign institutional investors. The Reserve Bank of India (RBI) has already pulled down its key interest rate by a total of 115 basis points this year to revive growth and lessen the blow of the COVID-19 pandemic. Apart from high inflation, data last month reflected the economy has stepped down the scale by just 7.5% in the September quarter compared with predictions of an 8.8% contraction, giving little room for the central bank to further cut rates.


Economists and market participants, however, will have all eyes set on the RBI’s commentary on liquidity measures as well as its forecasts on growth and inflation. Finance Minister Nirmala Sitharaman told Reuters on Thursday that India’s economy would boomerang back and achieve growth in 2021/22 after a sharp contraction in the latest year, with the government laying heavy stress on higher public spending. Rate-sensitive financial stocks edged higher ahead of the policy announcement. The Nifty Banking index, which surged nearly 24% in November, rose 0.4%.

The top gainers at Nifty as of 10:56 am noted to be Hindalco, UltraTech Cement and Grasim. The winners at Sensex as of 10:57 am noted to be UltraTech Cement, Bharti Airtel and ICICI Bank.