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Sensex, Nifty settle higher after RBI keeps rate steady

Sensex, Nifty settle higher after RBI keeps rate steady

Indian shares closed higher 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 COVID19 pandemic.

BENGALURU Indian shares closed higher 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 Nifty, which had risen as much as 1.4%, ended 0.89% higher at 11,200.15. The Sensex closed 0.96% higher at 38,025.45.

India’s benchmark 10-year bond yield closed at 5.86% 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.”

“MPC has shown contentment that the monetary transmission has been smoother in the current cycle, possibly implying they saw some positive breather in waiting,” said Madhavi Arora, lead economist at Edelweiss FX and Rates.

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.

The Nifty financials index closed up 1.05% and the NSE Banking index settled 0.6% higher.

However, the Nifty PSU Bank index, which rose as much as 0.9% during the session, settled 0.32% lower.

The Nifty IT index was up 1.38%, led by a 4.5% rise in shares of NIIT Technologies Ltd.

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  • First Published: August 6, 2020, 4:03 PM IST
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