Sensex, Nifty surge as RBI holds rates, maintains accommodative stance

Indian markets on Wednesday extended earlier gains, rising 0.7%, after the Reserve Bank of India kept policy rates unchanged and maintained accommodative stance as long as needed.

At 10.05 am, the benchmark index Sensex was up 0.7% at 49,611 points. The Nifty also gained 0.7% to 14787.70 points.

RBI Governor Shaktikanta Das maintained status quo on rates for the fifth time in a row and maintained an accommodative stance as long as necessary to support growth and keep inflation at targeted levels.

The governor also reiterated RBI’s commitment to keep liquidity conditions comfortable. This would imply a level of liquidity that would keep the system “surplus”.

Das said the recent surge in covid-19 infections has created uncertainty over economic growth recovery and suggested that the focus must be on containing spread of virus and economic recovery.

The central bank has retained its outlook on economic growth for 2021-22 at 10.5%. For financial year 2021-22, the MPC projects inflation at 5.2% in the first and second quarters.

“RBI kept rates unchanged as expected and will continue with its accommodative stance to mitigate the impact of the pandemic. An increase in the pace of vaccination and rural demand would in our view help growth,” said S Ranganathan, head of Research at LKP Securities

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