Mumbai:
The stock market benchmark Sensex rallied 327 points on Friday as financial stocks advanced following the RBI’s accommodative policy stance and steps to boost liquidity to the banking sector. Extending its gains for the seventh straight session — the longest winning streak in almost a year — the 30-share BSE Sensex rose by 326.82 points or 0.81 percent higher at 40,509.49.
The broader NSE Nifty rose by 79.60 points or 0.67 percent to 11,914.20 with banking, IT, and infrastructure stocks rising to 4 percent. RBI Governor Shaktikanta Das’ comments on expectation of GDP turning positive in the January-March quarter of the current financial year fuelled the market rally, traders said.
“Indian indices leaped today following the positive announcements of TLTRO & OMO, which will help in maintaining a good level of funds available at cheap rates from RBI to the industry,” Vinod Nair, Head of Research at Geojit Financial Services said. The RBI in its monetary policy on Friday announced that it will conduct on-tap targeted long-term repo operations (TLTRO) worth Rs 1 lakh crore to ensure comfortable liquidity conditions in the banking system.
As a special case, the central bank also announced open market operations (OMOs) in state development loans (SDL) in the current financial year. Rate-sensitive banking and financial stocks ended on a positive note, with the BSE bankex and finance rising to 2.64 percent.
Positive announcements with regards to a rationalization of risk weights for all new housing loans until March 31, 2022, was a shot for retail banks and housing finance companies, Paras Bothra, President of Equity Research, Ashika Stock Broking stated. ICICI Bank was the top gainer in the Sensex pack, rising around 3 percent. Axis Bank, HDFC twins, SBI, L&T, ONGC, and Infosys were among the gainers.
On the other hand, Sun Pharma, Asian Paints, Nestle India, UltraTech Cement, and HUL declined. Among sectoral indices, realty, healthcare, FMCG, and basic materials fell up to 1.58 percent.
Broader midcap and smallcap indices fell up to 0.42 percent. During the week, Sensex advanced 1,812.44 points or 4.68 percent while Nifty gained 497.25 points or 4.35 percent.
Deepak Jasani, Head of Retail Research, HDFC Securities said, “Banks and Housing finance stocks rose to post the RBI MPC meet outcome even as the rates have been kept unchanged and stance remains accommodative. The MPC announced multiple steps to keep interest rates on long-duration bonds under check.” The RBI on Friday left key interest rates unchanged but signaled more easing ahead to support an economy that it sees contracting 9.5 percent in the current fiscal. The central bank also unveiled several unconventional measures to boost liquidity and support economic activity while ensuring the government’s record borrowing program goes through smoothly. The RBI’s intent to support the economy even in the wake of rising inflation is comforting, Jasani commented.
Asian shares inched close to two-and-a-half years highs on Friday as revived hopes for a US stimulus deal eclipsed weaker-than-expected jobs data, while mainland Chinese markets jumped after a week-long holiday. European equities and US stock futures traded higher on Friday, as investors kept hopes for an American stimulus deal alive, at the end of a positive week for markets.
