RBI stance powers equities rise, interest rate sensitive stocks rise

MUMBAI: The Reserve Bank's decision to maintain an "accommodative stance", along with enhanced liquidity support, lifted the key equity indices to close at new record highs on Friday. The RBI also raised the country's economic growth forecasts. Besides, healthy foreign fund inflows gave additional push to the market.

Data regarding FII and FPI trading activity on BSE, NSE & MSEI in the Capital Market Segment showed Rs 2,969.59 crore flowing in. Globally, Asian shares scaled a record high on growing prospects of a large US economic stimulus package. Similarly, European markets edged slightly higher as investors monitored prospects of a US stimulus package and a last-minute Brexit trade deal. Back home, volumes on the NSE were higher than recent average. Among sectors, banks, metals, infra, realty, pharma, FMCG indices rose the most while energy index ended in the negative.

Resultantly, the healthy buying in interest rate sensitive stocks like banking, automobile lifted both the S&P BSE Sensex and the NSE Nifty50 to their new record high levels. The S&P BSE Sensex crossed the 45,000 mark for the first time ever. It touched a new intraday record high of 45,148.28 points.

On its part, the NSE Nifty50 touched a fresh record high of 13,280.05 points.

At the end of the trade, the NSE Nifty50 stood at 13,258.55, up by 124.65 points, or 0.95 per cent, from its previous close. Sensex was trading at 45,079.55, higher by 446.90 points, or 1 per cent, from the previous close of 44,632.65.

"Nifty closed the week up for the fifth consecutive week," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"While the trigger of the RBI policy is out of the way, markets globally now look forward to rising chances of an early US economic stimulus package. Post a good weekly close, we may see some more upside in the early part of the week."

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: "Indian equity market touched another new high, led by gains in banking stocks after RBI's policy outcome."

Hopes that vaccine rollouts will boost the global economy also supported investor sentiments.

"The overall accommodative stance of the RBI to support economic growth boosted sentiments. Nifty auto, metal also post best week since June 7. Going ahead, the overall structure of the market continues to remain positive given consistent FII inflows, optimistic RBI policy outcome and developments on the vaccine front. Sustenance of the demand recovery after the festive season would be key to watch out for." (IANS)

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