Sensex, Nifty hit record highs after RBI revises GDP forecast
Domestic shares hit record highs on Friday after the Reserve Bank of India (RBI) kept interest rates steady amid persistent high inflation, while also retaining its accommodative monetary policy stance. The NSE Nifty 50 index was up 0.80% at 13,239.05 as of 10:42am and the S&P BSE Sensex was up 0.80% at 44,993.92, hitting record highs. The rupee strengthened to 73.72 against the dollar.
Rate-sensitive financial stocks also rose after the policy announcement. The Nifty Banking index, which surged nearly 24% in November, was up 1.27%. UltraTech Cement Ltd rose as much as 6.2% to a record high, a day after the cement manufacturer said it would invest 54.77 billion rupees to expand capacity.
RBI governor Shaktikanta Das said India’s prospects have brightened with progress on Covid-19 vaccines, consumer confidence has turned positive and projected real GDP for the current financial year to contract just 7.5%.
All 53 analysts and economists in a Reuters poll conducted in November said they did not expect any change in rates at the three-day policy meeting ending Friday. “RBI has been extremely proactive in terms of providing support to the economy and to the market in whichever way possible,” said Avneesh Sukhija, senior financial analyst at BNP Paribas India.
The decision taken by RBI on Friday is in continuation from October’s decision of entering a revival mode from survival, Sukhija added. Including Friday’s session, the benchmark indexes have hit record highs for 11 of the last 18 sessions, boosted by progress in developing a working coronavirus vaccine. They added more than 11% in November on record inflows from foreign institutional investors.
The RBI has already cut its key interest rate by a total 115 basis points this year to revive growth and cushion the impact of the coronavirus pandemic.
(With agency inputs)
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