Indian shares inched higher on Wednesday, ahead of a central bank decision that could leave interest rates at record lows, as a second surge in domestic coronavirus cases sparked fears about the impact on economic growth.
The Reserve Bank of India (RBI), which has slashed its main repo rate by 115 basis points since March 2020 to cushion the impact of the COVID-19 pandemic, was expected to keep its benchmark lending rate at 4%.
Economists had expected the RBI to start normalising policy or unwind the large scale rupee liquidity in the banking system in the June quarter or latest by September quarter. That is now expected to be delayed, according to analysts.
"The Monetary Policy Committee is likely to maintain that growth needs consistent firm traction and continued policy support is crucial for a durable growth revival," Emkay Global Financial Services said in a preview note.
The NSE Nifty 50 index rose 0.2% to 14,709 and the S&P BSE Sensex was up 0.1% at 49,256.10 by 0347 GMT.
Investors will be keeping an eye on the central bank's liquidity stance to support the economy in relation to rising COVID-19 cases and inflation forecasts amid a rise in global commodity prices, especially crude oil.
{{/usCountry}}Investors will be keeping an eye on the central bank's liquidity stance to support the economy in relation to rising COVID-19 cases and inflation forecasts amid a rise in global commodity prices, especially crude oil.
{{/usCountry}}Earlier this week, India breached the grim milestone of 100,000 daily coronavirus infections for the first time.
Restaurant chain operator Barbeque-Nation Hospitality Ltd's shares will make their debut in the Mumbai market on Wednesday.
The International Monetary Fund said on Tuesday unprecedented public spending to fight the pandemic would push global growth to 6% this year, while projecting India's growth rate at 12.5% for 2021.