Sensex, Nifty surge as bank stocks rally on RBI boost
Photo Credit: Reuters

Indian shares closed over 3% higher on Friday as bank stocks rallied after the country's central bank cut a key interest rate to ease financial stress stemming from the world's biggest nationwide lockdown.

The Reserve Bank of India cut its reverse repo rate by 25 basis points (bps) in a bid to push banks to lend more, just two weeks after its dramatic 90-bps cut.

Already reeling from a slowdown in economic growth, India earlier this week extended its lockdown to curb the spread of the coronavirus that has shuttered thousands of businesses and sparked wild swings in financial markets. The virus has infected over 13,300 in the country and 437 have died, according to government data.

Some analysts said markets were pricing in the possibility of a staggered relaxation of the nationwide lockdown post April 20.

The Nifty closed 3.05% higher at 9,266.75, while the Sensex rose 3.22% to 31,588.60. Both the indexes finished the holiday-shortened week more than 1% higher.

A rise in equities across the globe as US outlined plans to gradually reopen its coronavirus-hit economy also aided the domestic investor sentiment.

The pan-European STOXX 600 index was up 2.6% after the United States joined a handful of other governments to issue guidelines to re-start their economies.

ICICI Bank Ltd rose 9.7% and was the biggest boost to the indexes, while peer Axis Bank Ltd rose 14%.

The Nifty banking index added 6.6%, while the financials index closed 5.46% higher.

But FMCG stocks took a beating, with the Nifty FMCG index slipping 1.05%.

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