Indian shares advance as cenbank leaves rates unchanged, assures liquidity

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BENGALURU, Oct 8 (Businesshala) – Indian stocks extended gains on Friday after the central bank kept key interest rates unchanged as expected and promised enough liquidity to support the economic recovery.

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At 0525 GMT, the NSE Nifty 50 index rose 0.72% to 17,918.90 and the benchmark S&P BSE Sensex rose 0.80% to 60,126.87.

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“There should be no concerns about the recovery or the adequacy of liquidity in the banking system to support the financial markets,” Reserve Bank of India Governor Shaktikanta Das said in his policy address.

“Our whole approach is gradual, we don’t want sudden or surprises,” he said, adding that there was no need to auction more G-SAPs or government securities acquisition programs at this point.

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The central bank kept the prime lending rate or repo rate unchanged at 4%, while the reverse repo rate or lending rate also remained unchanged at 3.35%.

Some analysts had indicated a slim possibility of the Monetary Policy Committee providing an indicative hike in the reverse repo rate.

The decision followed the country’s benchmark 10-year bond yield hitting a 17-month high of 6.30%, while the Indian rupee strengthened and breached the 75 mark, at 74.96 against the dollar after the RBI halted G-SAP buying. did business.

“This looks like a balanced policy from an equity market perspective. While the RBI does not see an urgent need for G-SAP, sticking to a lenient stance only suggests gradual removal of excess liquidity, and recovery. It is enough to support India’s equity,” said Abhiram Eleshwarpu, head of India Equities, BNP Paribas.

“The market would have expected a marginal increase in headline rates, which has not happened. So from that perspective, it is a moderately positive policy for the equity market.”

Meanwhile, shares of Tata Consultancy Services were up 1.9% ahead of September quarter results. IT giant Kickstarted the earnings season and is being closely monitored for signs of recovery for India Inc. (Reporting by Nallur Sethuraman in Bengaluru; Additional reporting by Savio Shetty in Mumbai; Editing by Sriraj Kalluvilla)

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