Sensex, Nifty hit record closing highs as RBI keeps repo rate unchanged, revises GDP growth forecast
The Reserve Bank of India revised India’s real Gross Domestic Product growth projection for the year 2020-’21 from -9.5% to -7.5%.
Equity benchmark indices hit new milestones on Friday as both the Sensex and Nifty finished trading at record closing highs after the Reserve Bank of India revised its growth forecast.
The 30-share BSE Sensex closed at 45,079.55, gaining 446.90 points from the previous closing mark. In intra-day trading, the index breached the 45,000-mark for the first time ever and went on to touch an all-time high of 45,148.28. The broader 50-share NSE Nifty too gained nearly 1% to hit a closing high of 13,258.55.
In Friday’s trading, all the sectors finished in the green with the FMCG and bank sub-indices gaining 1.40% and 2%, respectively. ICICI Bank, UltraTech Cement, Sun Pharma and Bharti Airtel were among the top gainers on the BSE, while Reliance Industries, HCL and HDFC lost the most.
Earlier during the day, the Reserve Bank of India kept the repo rate unchanged at 4% for a third straight time. The central bank also revised India’s real Gross Domestic Product growth projection for the year 2020-’21 from -9.5% to -7.5%. The RBI had predicted in its October assessment that the economy would contract by 9.5%. Reserve Bank of India Governor Shaktikanta Das said that the recovery in rural demand was likely to become stronger and urban demand was also gaining momentum.
Das said the Monetary Policy Committee voted unanimously to keep the repo rate unchanged. “We will use various instruments at appropriate time to ensure enough liquidity,” the RBI governor said, according to The Business Standard. The central bank that controls the reverse repo rate separately decided to keep it unchanged at 3.35%.
The repo rate is the rate at which the RBI lends to its clients generally against government securities. The reverse repo rate, on the other hand, allows banks to deposit funds with the central bank and earn interest on it.
“MPC decided to continue with accommodative stands of monetary policy as long as necessary, at least till current financial year and into next year to revive growth on a durable basis and mitigate the impact of coronavirus while ensuring that inflation remains within the target,” Das said.
