Benchmark indices Sensex and Nifty closed higher on Thursday, continuing their winning streak for the fifth consecutive session after the RBI unexpectedly kept policy rates unchanged as the global banking crisis added to uncertainty in the economic outlook.
Buying in index majors HDFC Bank and Reliance Industries also added to the optimism in the equity market.
Recovering from early losses, the 30-share BSE Sensex closed 143.66 points or 0.24% higher at 59,832.97. During the day, it gained 260.75 points, or 0.43%, to 59,950.06.
The broader NSE Nifty settled 42.10 points, or 0.24%, higher at 17,599.15 after falling in early trade.
After raising interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept the benchmark rate unchanged as the global banking crisis added to the uncertainty over the economic outlook.
RBI Governor Shaktikanta Das, however, promised to raise the interest rate again if needed, adding that the decision to pause was “only for this meeting”.
The six-member Monetary Policy Committee of the RBI voted unanimously to keep the repurchase or repo rate unchanged at 6.50%.
Most analysts had expected one final hike of 25 basis points in the RBI’s current tightening cycle before pausing.
“RBI’s pause is like Sachin’s stroke on a difficult pitch, but has the luxury of setting eyes and hitting the ball wherever he wanted. RBI had the option to increase the rate or pause. The pause was completely unexpected was not.
Kotak Mahindra Asset Management MD Nilesh Shah said, “RBI will look at the development and data before taking the next call. The market expects RBI to score maximum runs and win the match on inflation and growth, no matter where they bowl.” In which direction do you kill? company limited
Among Sensex firms, Bajaj Finance emerged as the biggest gainer by climbing 2.95%. Tata Motors, Bajaj Finserv, IndusInd Bank, Sun Pharma, Mahindra & Mahindra, State Bank of India, Larsen & Toubro, HDFC, HDFC Bank, Maruti, Reliance Industries and Bharti Airtel were the other major gainers.
HCL Technologies, Axis Bank, ICICI Bank, Tech Mahindra and Titan were among the laggards.
RBI surprises the market by keeping policy rates on hold; Still, there was some talk of this unexpected statement, which puts it ahead of other major central banks around the world, said Santosh Meena, head of research at Swastika Investmart Ltd.
“The market is in a good mood, and this policy gives us more reason to be happy. However, given that we have seen a good recovery from recent lows and we have a long weekend and weekly close, there is some profit-taking Or consolidation cannot be ruled out,” Meena said.
In Asian markets, Seoul, Japan and Shanghai closed with losses, while Hong Kong closed in the green.
European stock markets were trading in positive territory during afternoon trade. US markets mostly closed with losses on Wednesday.
“The Reserve Bank of India has taken a prudent decision to hold off on rate hikes in view of the uncertainty prevailing in the global financial market and the potential challenges that may arise for India’s growth due to lack of clarity on the El-Nino phenomenon. RBI’s pause The decision to take is aimed at supporting growth in the economy.
“While the RBI governor has indicated that the pause in rate hikes is only applicable for this meeting, the central bank remains highly cautious about growth in the economy and will carefully assess the situation before making any rate hikes in the future. In these uncertain times, RBI believes that another rate hike could potentially hamper the growth momentum of the economy,” said Sunil Damania, Chief Investment Officer, Marketsmojo.
On Wednesday, the Sensex had closed at 59,689.31, up 582.87 points or 0.99%. The Nifty closed at 17,557.05, up 159 points or 0.91%.
Meanwhile, global oil benchmark Brent crude fell 0.54% to $84.53 per barrel.
Foreign portfolio investors (FPIs) bought shares worth Rs 806.82 crore on Wednesday, according to exchange data.