Sensex, Nifty end at record highs after RBI keeps policy rates unchanged

Benchmark equity indices continued their strong run on February 5 with the Sensex ending 117.34 points higher at 50,731.63 and Nifty rising 28.60 points at 14,924.30.

In early trade, Sensex surpassed the 51,000-mark first time hitting an intraday high of 51,073. While Nifty50 surpassed the psychological 15,000-mark and hit a record high of 15,015 levels.

SBI was the top gainer on the index as analysts raised their targets better-than-expected December earnings. Tata Steel, Divis Labs, Kotak Mahindra Bank and Dr Reddy’s Labs were among major gainers on the Nifty, while losers were Axis Bank, Bharti Airtel, Tata Motors, ICICI Bank and UPL.

The broader markets, however, came under selling pressure. The S&P BSE MidCap and SmallCap indices ended 0.93% & 0.28% lower, respectively.

Domestic equities remained buoyant and benchmark Nifty surpassed the psychologically-key 15,000 level before settling lower, said Binod Modi, Head Strategy at Reliance Securities.

RBI MPC Outcome

The meeting of the six-member Monetary Policy Committee headed by RBI Governor Shaktikanta Das concluded this morning. The committee has kept the interest rates unchanged, maintaining the repo rate at 4% and the reverse repo rate at 3.35% with an accommodative stance as long as necessary.

The regulator will also reverse the CRR (Cash Reserve Ratio) cut from the current 3% to 4% in two phases. Effective March 27 the CRR will rise to 3.5% and normalise to 4% w.e.f May 22, 2021.

On the growth front, RBI expects real GDP to grow at 10.5% in 2021-22 while the projection for CPI-based inflation was revised to 5.2% for Q4FY21.

“Notably, RBI policy outcome was also broadly on expected line, while announcements about allowing retail participation in bond markets through GILT Account, extension of HTM restoration to 19.5 per cent up to June’23 and availability of funds under on tap TLTRO for NFBCs bolstered investors’ confidence,” added Modi.