Mumbai: India stocks gained on optimism that the nation’s central bank may abandon its hawkish view on interest rates, in a decision due on Thursday.
The S&P BSE Sensex advanced for a fifth session, climbing 1 per cent to 36,975.23 in Mumbai, its highest level since September. The NSE Nifty 50 Index also added 1.2 per cent to reclaim the 11,000 mark, a level last touched in end-September. Many Asian markets remained closed for trading due to the Lunar New Year holidays.
India’s government has called on the central bank to cut interest rates to fire up the economy, as the federal budget aims to spur spending. The Reserve Bank of India will “hopefully” reduce policy rates by a quarter percentage point and switch to a neutral stance, Rajiv Kumar, vice-chairman of government think-tank Niti Aayog, said. Of the 32 economists surveyed by Bloomberg as of Tuesday, eight see the RBI lowering the benchmark rate.
In the currency market, the rupee appreciated by 8 paise to 71.49 in early trade on the forex market amid positive opening in domestic equities and fresh foreign fund inflows. Forex traders said investors were cautious ahead RBI’s Monetary Policy Committee outcome scheduled for February 7.
Moreover, rising crude prices capped the gains for the domestic unit. At the Interbank Foreign Exchange, the rupee opened higher at 71.56 then gained further ground to touch 71.49 against the US dollar, showing a gain of 8 paise over its previous closing. In a very volatile trade, the domestic currency also touched a low of 71.60, showing a loss of 3 paise over its last close. On Tuesday, the rupee had settled 23 paise higher at 71.57 against the US dollar.
Foreign funds purchased shares worth Rs4.20 billion on a net basis, and domestic institutional investors bought shares worth Rs1.94 billion on Tuesday, provisional data showed. The global benchmark, brent crude oil was trading at $62.02 per barrel, higher by 0.06 per cent.