Indian shares rise 1% after central bank keeps rates steady

  • Reuters
  • Stock Market News
Indian shares rise 1% after central bank keeps rates steady
Credit: © Reuters.

By Sethuraman N R

BENGALURU, April 7 (Reuters) - Indian shares and bonds rose on Wednesday after central bank kept interest rates at record lows to support the economy on the back of a record surge in COVID-19 cases, and announced a secondary market government security purchase programme.

The Reserve Bank of India (RBI) stuck to its accommodative monetary policy stance amid concerns that the resurgence in infections could derail the country's nascent economic recovery. NSE Nifty 50 index .NSEI closed 0.92% higher at 14,819.05 and the S&P BSE Sensex .BSESN rose 0.94% to 49,661.76.

The benchmark 10-year bond yield IN10YT=RR briefly rose to 6.19% after the policy decision, but fell to a low of 6.05% after the central bank announced a secondary market government securities (G-sec) acquisition programme.

"Fears of any pre-mature tightening either through rates or liquidity management by some sections of the market have been put to rest by RBI's dovish tone today," said Abheek Barua, chief economist, HDFC Bank (NS: HDBK ).

The announcement of the G-sec acquisition program is likely to stabilise and support long-term yields, Barua said.

India's second wave of coronavirus infections continued to swell as the country reported a record 115,736 new cases on Wednesday. Indian rupee INR=IN weakened to 74.55 against the dollar, hitting its weakest level since Nov. 17.

The Nifty bank index .NSEBANK and the auto index .NIFTYAUTO rose 1.5% and 1.6%, respectively. ICICI Bank ICBK.NS and Infosys INFY.NS were top boosts to the index, rising 1.9% and 1.3%, respectively.

Shilpa Medicare SHME.NS shares rose as much as 14.3% after an executive told Reuters that the drugmaker has the capacity to manufacture 100-200 million doses of a protein-based vaccine for COVID-19. of restaurant chain Barbeque-Nation Hospitality BARQ.NS recovered early losses to rise 18% in their debut trading on Wednesday.

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