Sensex reclaims 60,000-mark, Nifty tops 17,900 after RBI keeps key rates unchanged

Equity benchmark Sensex rallied over 500 points to reclaim 60,000 mark in morning trade on Friday after the Reserve Bank of India (RBI) maintained kept key interest rates unchanged in its bi-monthly monetary policy review. After reclaiming the 60,200 level, the 30-share Sensex was trading 447 points or 0.75 per cent higher at 60,125.

Similarly, the Nifty is placed above 17,900. It touched 17,941.85 after the RBI’s policy outcome. 

Tata Steel was the top gainer in the Sensex pack, rising over 2 per cent, followed by Infosys, TCS, Reliance Industries, HCL Tech and Bajaj Auto. On the other hand, HUL, NTPC, Titan and Nestle India were the laggards.

Rate-sensitive banking and auto indices were trading on a positive note, while the realty index was in the red.

The Reserve Bank of India (RBI) has decided to keep the benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance even as the economy is showing signs of recovery after the second COVID wave. This is the eighth time in a row that the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, has maintained status quo.

The RBI policy, as expected, remained cautious and in a wait-and-watch mode, said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities.

“Even as it increased the quantum under the 14-day variable rate reverse repo (VRRR) auctions and opened the option of 28-day VRRR auctions, it adequately sounded out on its dovishness and the need to ensure liquidity conditions remain comfortable,” he noted.

He does not see the RBI in a hurry to normalise liquidity conditions as well as the reverse repo rate in the near term. “We continue to see the February policy as the earliest period of review for the RBI to narrow the policy rate corridor by raising the reverse repo rate.” 

Anand Nevatia, fund manager, TRUST Mutual Fund, said that the decision clearly reflects that the MPC is still comfortable and convinced with an accommodative stance. 

“A favourable than anticipated inflation trajectory and downward revision of CPI has allayed any fears of near term rate hikes. The Governor has assured the markets of ample liquidity while announcing higher VRRRs to absorb the excessive systemic liquidity,” Anand said.

Earlier on Thursday, banks, consumption and auto stocks saw robust buying on Friday. The IT pack also traded in the green on earnings optimism. The 30-share BSE Sensex rallied 488.10 points or 0.82 per cent to finish at 59,677.83. Similarly, the broader NSE Nifty spurted 144.35 points or 0.82 per cent to 17,790.35.

READ MORE: Monetary Policy: RBI keeps policy rate unchanged 8th time in a row at 4%

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