Domestic stock markets extended gains in afternoon deals on Friday, after the Reserve Bank of India (RBI) kept interest rates unchanged citing elevated levels of inflation. The S&P BSE Sensex index jumped 386.24 points – or 0.96 per cent – to touch 40,568.91 at the strongest level of the day after the central bank’s announcements, and the broader NSE Nifty 50 benchmark climbed to as high as 11,935.75, up 101.15 points – or 0.85 per cent – from its previous close. The RBI vouched to retain its “accommodative” stance of policy for as long as necessary to rescue the economy from the damage caused by the coronavirus pandemic.
At 3:19 pm, the Sensex traded 300.97 points – or 0.75 per cent – higher at 40,483.64, while the Nifty was up 78.15 points – or 0.66 per cent – at 11,912.75.
RBI Governor Shaktikanta Das said the country’s GDP or gross domestic product may break out of the coronavirus-induced contraction and turn positive by the fourth quarter of 2020. The central bank said the country’s economy is likely to contract an overall 9.5 per cent in the financial year ending March 2021.
Analysts said the RBI’s policy action was along expected lines.
The RBI “continued to highlight that it will watch the developments closely and continue with its accommodative stance as and when needed for 2020 as well as 2021”, said Amit Shah, head of India Research, BNP Paribas.
The RBI has already cut the repo rate – or the key interest rate at which it lends money to commercial banks – by 115 basis points since late March in response to the COVID-19 pandemic.
Equities elsewhere in Asia registered mild gains as investors awaited clarify on a second debate for the US presidency, following the fractious September 29 faceoff between US President Donald Trump and Democratic presidential candidate Joe Biden.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.28 per cent, whereas the E-Mini S&P futures were last seen trading 0.39 per cent higher, indicating a positive start for US markets on Friday.
European shares started the day on a positive note, with the United Kingdom’s FTSE 100 index last seen trading 0.61 per cent higher in early trade.