Market Hits New Lifetime High After RBI Policy; Sensex Nears 70,000, Nifty Surpasses 21,000 For The First Time

Indian market cheered RBI's monetary policy outcomes on Friday so much that Sensex and Nifty touched a new lifetime high. The 50-scrip benchmark Nifty crossed the 21,000 mark for the first time, while Sensex is now a couple of points shy from hitting the psychological 70,000 mark. The central bank kept the repo rate steady at 6.5% for the fifth time in a row.

At the time of writing, Sensex traded at 69,827.75, up by 306.06 points or 0.44%. The 30-scrip benchmark hit a new historic high after the RBI policy to a staggering 69,888.33. This benchmark is now just 112 points away from surpassing 70,000 levels.

Meanwhile, Nifty was at a sky-high level breaching its critical 21,000 mark. The benchmark touched a new lifetime high of 21,005.05. It traded at 20,996.90, up by 95.75 points or 0.46%.

Stocks like JSW Steel, HCL Tech, NTPC, L&T, HDFC Bank, and IndusInd Bank were top gainers. However, Bajaj Finance, M&M, Bharti Airtel, and SBI were among the top laggards.

Except for telecom and marginal dip in auto stocks, all other sectoral indices were trading higher. Metal, realty, IT, banking, capital goods, and consumer durables were top performers.

Of the total 3,570 stocks listed on BSE, about 2,275 stocks advanced, while 1,132 stocks declined and 163 stocks were trading flat. Meanwhile, a whopping 283 stocks hit new 52-week highs, and 13 stocks hit new 1-year lows. Also, over 260 stocks touched their upper circuits, and 129 stocks struck lower circuits.

RBI kept key rates unchanged for the fifth time in a row while maintaining its 'withdrawal of accommodation' stance on Friday. This is despite inflation staying well below RBI's upper tolerance limit for two consecutive months, and GDP growth surpassing its quarterly estimates for the second month straight.

Accordingly, the policy repo rate under the liquidity adjustment facility (LAF) is unchanged at 6.50%. While the standing deposit facility (SDF) rate remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the Bank Rate at 6.75% each.

Himanshu Panchmatiya - Cofounder - Switch My Loan said, "With a focus on inflation, liquidity & currency management, the repo rate is expected to remain 6.50% for next 6-9 months. The market has realised that the current repo rate is the new normal."

Also, Anirudh Garg, Founder, and Fund Manager at Invasset, PMS said, "The stock market is likely to react positively to the RBI's recent announcements. The decision to maintain the policy repo rate and the continued focus on inflation targeting provides a stable environment for investors. This stability, combined with India's strong economic fundamentals and GDP growth, is likely to boost investor confidence. The banking sector may benefit from the steady interest rate environment, as it aids in better margin management."

Furthermore, Garg added, "sectors like healthcare and education might receive a positive impact from the enhanced UPI transaction limits, enabling more significant financial transactions in these areas. However, the emphasis on inflation control and potential supply-side shocks could mean cautious investment in sectors heavily reliant on raw material prices. Overall, the stock market is likely to experience a steady momentum, buoyed by a stable policy environment and strong economic indicators."

Traders give thumbs to the RBI policy outcomes as the status quo on the repo rate was on expected lines. Apart from this, GDP growth estimates have been raised by the central bank, hinting that the Indian economy will continue to lead in the world. The RBI policy outcomes is also in-line with GoodReturns poll of 40 economists who expected status quo in December.

However, RBI raised its GDP growth forecast to 7% from 6.5% for the current financial year. In the fourth quarter of FY24, RBI forecasted GDP growth at 6%, which is higher than its earlier estimates of 5.7%.

On the contrary, RBI kept the CPI inflation target unchanged at 5.4% for FY24.

Notably, the latest rates action also comes ahead of the interim Union Budget for the financial year 2024-25 which will be presented by Finance Minister Nirmala Sitharaman on February 1, 2024.

The rate decision was taken by a six-member panel of the Monetary Policy Committee (MPC) chaired by the RBI governor. These include, Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof. Jayanth R. Varma, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shaktikanta Das.

The next RBI policy meeting will be scheduled from February 6th to 8th.