Markets cheer RBI policy, Sensex spurts 460 pts

The Sensex rose 460.37 points (0.94%) to close at 49,661.76 while the Nifty jumped 135.55 points (0.92%) to close at 14,819.05.

By Urvashi Valecha

Shares rose for the second straight session on Wednesday as the investor sentiment remained upbeat, with the Reserve Bank of India maintaining its accommodative stance. The Sensex rose 460.37 points (0.94%) to close at 49,661.76 while the Nifty jumped 135.55 points (0.92%) to close at 14,819.05.

Buying in banking, automobiles and IT stocks pulled up the markets. Banking stocks primarily led the charge after investors rejoiced over the dovish monetary policy and the unchanged repo rate. The Nifty Bank shot up by 1.51%, and the biggest gainers on the index were IDFC First Bank, Bandhan Bank, Federal Bank, State Bank of India and IndusInd Bank, which rallied by 4.16%, 3.35%, 2.73%, 2.18%, and 2.13%.

Market experts lauded the RBI governor’s monetary policy statement. Gaurav Dua, senior vice president, head – capital market strategy, Sharekhan by BNP Paribas, said, “In line with expectations, the RBI has maintained a status quo on policy rates and reassured the financial markets on its commitment to retain the accommodative policy stance… The easing of yield curves and commitment of keeping interest rates low with ample liquidity are positives for the equity markets too.”

The bond markets reacted positively with the 10-year bond yield easing during the day. This easing of bond yields helped the equity markets rise. The announcements on Wednesday also put an end to the market’s worries about an early withdrawal of liquidity.

Mihir Vora, director and chief investment officer, Max Life Insurance, said, “Measures announced are intended to lower borrowing costs, ease financial conditions and to keep liquidity supportive for credit offtake. The announcement ebbed worries of any early liquidity withdrawal.”

Foreign portfolio investors bought stocks worth $30.32 million in total. The biggest gainers on the Nifty were JSW Steel, Wipro, SBI, IndusInd Bank, and SBI Life, up by 5.33%, 2.36%, 2.18%, 2.13%, and 2.11%. The biggest losers on the Nifty were Adani Ports and SEZ, Tata Consumer, UPL, NTPC, and Titan down by 2.76%, 1.44%, 1.26%, 0.52%, and 0.5%, respectively.

Market participants expect the impact of the monetary policy statement to wither away. Dhiraj Relli, MD and CEO, HDFC Securities, said, “The markets have reacted well to this measure as this will result in rates not rising, and in fact, easing down for businesses. The impact of the MPC announcements, however, will wither away in a couple of days and the markets will keep responding to other triggers including Covid-19 progress and corporate results.”

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