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Sensex, Nifty close nearly 1% higher as bank stocks lead gains
Photo Credit: Reuters

The Nifty rose to a three-week high on Thursday with private-sector lenders such as Axis Bank and ICICI Bank leading gains, a day after the Reserve Bank of India (RBI) raised its policy rate for the first time in over four years.

Growing inflation concerns prompted the RBI’s Monetary Policy Committee (MPC) to lift the repo rate by 25 basis points while maintaining its “neutral” stance instead of changing to “tighten”.

The rate hike is a negative but markets are recovering due to short-covering, since people sold off their positions at higher levels prior to the RBI meet and are now covering their positions at lower prices, said Sumit Pokharna, vice president, Kotak Securities.

“Investors were anticipating a rate hike due to depreciation of the rupee, major selling in the debt markets and rising inflation on concerns over crude prices,” he added.

The NSE Nifty was up 0.92 percent at 10,782.45 as of 0541 GMT, having earlier risen as much as 0.95 percent to its highest level since May 16.

The benchmark BSE Sensex was 0.96 percent higher at 35,517.02, rising 0.99 percent to clock its biggest intraday percentage gain since May 31.

The Nifty private bank index rose as much as 1.5 percent. Axis Bank and ICICI Bank jumped over 2 percent each while HDFC Bank Ltd was up 1 percent.

Index heavyweights such as Reliance Industries Ltd and Infosys Ltd climbed 1 percent each.

Shares of Hindustan Unilever Ltd rose as much as 1.7 percent after brokerages reaffirmed their confidence in the company’s growth strategy following the consumer goods giant’s annual analyst day on Wednesday.

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