On Wednesday, the RBI kept policy rates unchanged and maintained an accommodative stance to support growth, given the rising covid-19 cases in the country
MUMBAI: Indian stock markets rose on Thursday, extending gains from the previous day, with benchmark indices up 0.7% each, as the Reserve Bank of India stuck to its accommodative stance and assured of maintaining sufficient liquidity.
At 9.50am, the benchmark Sensex was up 0.74% or 366 points at 50028, while the Nifty50 rose 0.7% or 112 points to 14932 points.
Indian equities were also higher tracking advances in US markets which hit fresh record highs after the minutes of the latest FOMC meeting showed that members of Federal Reserve were in no hurry to tighten monetary policy amid a pandemic.
Despite improving economic outlook and labour market conditions, US Fed officials said it will be a while before they begin any type of tapering of monthly asset purchase programme and tightening of policy rates.
"This has certainly offered respite to global equities. In our view, progress on approval of huge infrastructure programme and corporate tax rates are likely to be in focus in coming weeks", said Binod Modi, Head Strategy at Reliance Securities.
On Wednesday, the RBI kept policy rates unchanged and maintained an accommodative stance to support growth, given the rising covid-19 cases in the country. Announcement of the G-Sec acquisition program (G-SAP 1.0) along with variable rate reverse repo of longer tenor will lead to a flatter yield curve.
"The key take away is that the RBI will continue to maintain the ultra-loose monetary policy and infuse liquidity for a long time as Covid surge will keep imparting uncertainty to growth outlook. The RBI has reiterated that growth is the priority", said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
Analysts, however, expect local level mobility restrictions due to continued surge in new Coronavirus cases in various parts of the country are expected to keep markets volatile in the near term.
"We further believe that given experience in 2020 and possibility of further ramp-up in vaccination rollout process, spread of virus can be controlled without a large-scale of economic damage. Therefore, any near-term possible correction in the market should be treated as opportunity of bargain trading", Modi added.