Nifty and Sensex win ahead of RBI meeting

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A security guard walks past the Indian National Stock Exchange building in Mumbai, India.

Dhiraj Singh | Bloomberg | Getty Images

Indian stocks hit a record high on Wednesday as investors remained bullish amid the corporate earnings season and ahead of the central bank policy meeting.

The Nifty 50 index rose 0.79% to 16,258.05, led by gains in the financial services index which rose 2.44%. Earlier, the benchmark hit a session high of 16,290.20.

On Tuesday, the Nifty 50, which is the weighted average of the 50 largest Indian companies on the National Stock Exchange, closed above the 16,000 level for the first time.

Meanwhile, the S&P Sensex rose 0.79% to 54,247.64 on Wednesday, retreating from a high of 54,440.80.

Shares of Indian banks climbed: HDFC rose 2.6%, Axis Bank 1.8% and ICICI 3.2%.

Shares of the State Bank of India, however, were down 0.4%. India’s largest public lender is due to release results for the three months ending in June on Wednesday.

RBI in focus

Indian markets have held up relatively well despite the economy struggling since last year to revive growth – progress has been stunted by a devastating second wave of Covid-19 this year.

Investors are also eagerly awaiting the decision of the Reserve Bank of India, which begins its three-day monetary policy meeting on Wednesday. The central bank is expected to leave interest rates unchanged.

“The RBI MPC is unlikely to tip the (political) boat in August, choosing to keep the repo rate at 4% and the political corridor unchanged,” Singapore’s DBS Group Radhika Rao said in a note. last week.

“The forward-looking orientations will promote the maintenance of the accommodative policy to guard against growth risks, in particular the third wave of Covid,” she said. “The accompanying commentary will take inflation risks into account through close monitoring and refrain from adjusting policy levers for now.”

India’s retail price inflation figures for May and June are above the RBI inflation target range of 2% to 6%.

Growing retail investors in India

The resilient Indian stock markets have seen an influx of retail investors, despite the pandemic’s struggles in the economy.

Retailer participation has likely increased in part due to a low interest rate environment. The RBI has also introduced measures to inject more liquidity into the system to help the economy recover.

India’s National Stock Exchange, which manages the Nifty 50 index, has added nearly 15 million new investors to the markets in the past 15 months, according to its CEO Vikram Limaye.

“The participation of retailers in Indian stock markets has been a very important component – almost 50% of market activity is non-institutional, non-exclusive. It largely covers the retail landscape,” he said. he said Wednesday on CNBC’s “Street Signs Asia”.

NSE data showed that for the fiscal year just ended – April 2020 to March 2021 – 45% of equity market participation on the exchange came from individual investors.

“This is a good trend because we want the participation of retailers in the markets to improve and the penetration levels are still low and there is still a long way to go,” said Limaye.

He added that the exchange was taking steps to improve investor education so that people are aware of the downside risks of retail investments and can invest according to their knowledge and risk appetite.

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