India stocks rise after RBI Governor Shaktikanta Das flags strong recovery

RBI Governor Shaktikanta Das reiterated that policy will remain accomodative to support growth, while cautioning a resurgence in coronavirus infections remains a risk to recovery.

India’s stock benchmark rose, following a volatile morning, after the central bank governor said the recovery in Asia’s third largest economy has been stronger than expected.

A digital screen on the facade of the Bombay Stock Exchange (BSE) building displays stock prices as Sensex soared. (PTI File Photo)

The S&P BSE Sensex added 0.4% to 43,998.48 as of 1:37 p.m. in Mumbai, while the NSE Nifty 50 Index climbed by about the same magnitude, erasing earlier losses. Both gauges closed at record highs Tuesday. The expiry today of monthly futures and options contracts may add to volatility.

Governor Shaktikanta Das reiterated that policy will remain accomodative to support growth, while cautioning a resurgence in coronavirus infections remains a risk to recovery.

“With Europe and some parts of the U.S. thinking about partial lockdowns, we are watching closely for a potential second wave in India that would hurt the economy and markets,”said Sanjeev Hota, head of research at Sharekhan Ltd. in Mumbai.

Gains in India’s equities have been driven by net foreign fund purchases that are on course for a monthly record, while a report tomorrow may show India’s economy entered its first technical recession since at least 1996 last quarter, based on economists’ estimates.

The yield on the benchmark 10-year government bond fell one basis point to 5.88%, while the rupee strengthened 0.1% to 73.82 against the U.S. dollar.