BENGALURU Indian shares surged on Thursday after the country’s central bank kept interest rates steady but vowed to do “whatever is necessary” to revive an economy battered by the COVID-19 pandemic.
The NSE Nifty 50 index rose 1.29% to 11,244.50 by 0734 GMT and the S&P BSE Sensex advanced 1.37% to 38,172.05.
As of Wednesday’s close, the Nifty and Sensex have risen nearly 23% since the RBI last cut rate on May 22. India’s benchmark 10-year bond yield rose to 5.85% from 5.81% pre-policy.
The move to keep interest rates unchanged comes amid a recent rise in retail consumer prices. RBI Governor Shaktikanta Das said the central bank would remain “watchful for a durable reduction in inflation to use the available space to support the revival of the economy.”
“RBI has categorically stated that there is more space for monetary action going forward. If the concerns regarding inflation remain under control, we can expect further policy action going forward,” said V.K. Vijaykumar, chief investment strategist, Geojit Financial in Thrissur.
Around two-thirds of economists polled by Reuters had expected the RBI to cut the repo rate by another 25 basis points despite rising inflation.
The RBI said it would allow a one-time restructuring of loans, a move that would help banks, at a time when the bad loans in the system is expected to double in the pandemic-ravaged economy.
Both the NSE Bank index and the Nifty financials index rose over 1.7%. In Mumbai’s main stock indexes, gains were seen across the board except in autos.
The Nifty IT index was up 1.38%, led by a 4.5% rise in share of NIIT Technologies Ltd.
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