Indian equity benchmarks surged on Wednesday after the Reserve Bank of India changed its monetary policy stance to “neutral”.
At the time of writing, the BSE Sensex was up 555.59 points at 82,190.40, while the Nifty50 index rose 185 points to 25,198.15.
Overnight, US equity stocks rose as oil prices slipped more than 4%. Most Asian stocks opened higher on Wednesday, tracking overnight gains in Wall Street.
However, Chinese stocks were by far the worst performers, as Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell more than 4% each from Tuesday’s highs.
RBI keeps repo rate unchanged
The Reserve Bank of India has kept the key lending rate (repo rate) unchanged at 6.5%.
This is the tenth consecutive time the central bank has left the repo rate unchanged.
However, the central bank has changed its stance to “neutral” from “withdrawal of accommodation” earlier.
RBI Governor Shaktikanta Das said the monetary policy committee considered changing the stance and remained focused on bringing the inflation rate within the central bank’s preferred range.
Also, India’s GDP forecast for 2024-25 (April-March) was left unchanged at 7.2% by the RBI. Das further said that India’s financial sector was healthy, resilient and stable.
Bank stocks, NBFCs rally after RBI changes policy stance
Shares of interest rate-sensitive stocks climbed after the policy meeting of the RBI.
Shares of banks and non-banking finance companies (NBFCs) surged by up to 4% on Wednesday after the RBI changed its policy stance to “neutral”.
Shares of SBI rose 2.6% on Wednesday, while those of ICICI Bank also gained 1.7%. Axis Bank’s stock rose 2.5%, while Punjab National Bank’s shares surged 1.5%.
Shares of Shriram Finance were among the top gainers on Wednesday.
The stock surged by more than 4%, boosted by positive sentiments after the RBI’s meeting outcome.
Shares of other NBFCs, including HDFC Asset Management Company, Cholamandalam Investment and Fin Co and Muthoot Finance surged by 3% on Wednesday morning.
OMC stocks rise as oil prices ease
Shares of oil marketing companies surged on Wednesday as global prices declined sharply since Tuesday.
Shares of Indian Oil Corporation rose 1.6%, while those of Bharat Petroleum Corporation gained 1.9%.
Among these, Hindustan Petroleum Corporation was the top gainer as its shares surged nearly 5%.
Oil prices had slipped more than 4% on Tuesday as traders waited for an Israeli response to Iran’s attack last week.
Prices had declined as there had not been any response so far from Israel, which eased some of the tensions in the oil market.
Downstream oil marketing companies tend to perform better when oil prices fall as they import crude from outside to refine into petroleum products.
Torrent Power’s stock jumps 9%
Shares of leading power company, Torrent Power, jumped 9% on Wednesday, and touched a new record high.
The stock advanced after Torrent Power secured a letter of award from Maharashtra State Electricity Distribution, according to a report by The Economic Times.
The letter of award was for long-term supply of 2,000 Megawatt (MW) Energy Storage Capacity from InSTS Connected Pumped Hydro Storage Plant, according to the report.
Meanwhile, shares of SpiceJet surged 7% on Wednesday on settlement of a dispute. SpiceJet and Babcock & Brown Aircraft Management settled a $131.85 million dispute.
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