ADVERTISEMENT

India’s Sensex Completes Best Week Since June as RBI Holds Rates

India’s equities benchmark climbed to its highest since February after the central bank signaled more policy easing ahead.

India’s Sensex Completes Best Week Since June as RBI Holds Rates
The BSE building stands in Mumbai, on July 6, 2020. (Photographer: Dhiraj Singh/Bloomberg)

India’s equities benchmark climbed to its highest since February after the central bank signaled more policy easing ahead and made steps to support the economy, improve lending, while keeping rates unchanged.

The S&P BSE Sensex climbed 0.8% in Mumbai, while the NSE Nifty 50 Index advanced 0.7%, to mark a seventh successive session of gains, their longest winning streak since November. Both measures completed their best week since early June and are close to erasing year-to-date losses.

“Monetary policy has been very supportive of growth with ample liquidity measures,” said Sampath Reddy, chief investment officer at Bajaj Allianz Life. “We also believe that the worst is behind, and that the economy is on a recovery path.”

Accommodative monetary policy, along with signs of a recovery in the economy, may benefit local companies as India heads into its annual festive season, while the central bank also signaled inflation is easing. The Monetary Policy Committee left the benchmark repurchase rate at 4%, as predicted by all 32 economists in a Bloomberg survey.

The central bank also announced measures to ease a cash crunch among retail borrowers by relaxing capital rules for lending to individuals and small businesses. Lenders including Axis Bank Ltd., ICICI Bank Ltd. and State Bank of India climbed at least 3.5%. Mortgage companies too advanced, led by a 7.3% gain in Repco Home Finance Ltd.

The 10-year bond yield slipped eight basis points to 5.94%, while the rupee was up 0.1% against the U.S. dollar.

With the earnings season underway, IT firms Wipro Ltd. and Infosys Ltd. may give some guidance on the outlook when they report results next week.

The Numbers

  • Ten of 19 sector indexes compiled by BSE Ltd. rose, led by a gauge of banks
  • HDFC Bank Ltd. contributed the most to the Sensex advance, increasing 3.5%
  • Vedanta Ltd. closed 3.4% higher, after it crossed half-way mark in its delisting process; the company may look at the price it can afford and go in for a counter offer if required, its chairman, billionaire Anil Agarwal told television channel CNBC-TV18 on Friday.

Market-related stories

  • RBI Adds TLTRO Liquidity Facility, Will Buy More Bonds: TOPLive
  • Vedanta Delisting Plan Attracts Few Investors as Final Day Dawns
  • Tata Sons Mulls Bid for Some Mistry Family Stake in Group: Mint

©2020 Bloomberg L.P.