Sensex rallies 460 pts as D-St cheers policy

Mumbai: The RBI’s decision to support the government’s huge borrowing programme and manage the yield in the bond market lifted investor sentiment on Wednesday as across-the-board buying helped sensex close 460 points higher at 49,662 points. ICICI Bank, Infosys and Reliance contributed the most to the sensex’s gains with 27 of its 30 constituents closing higher.
According to Gaurav Dua, SVP, head — capital market strategy, Sharekhan, the RBI maintained status quo as expected on policy rates and reassured the market on its commitment to retain accommodative policy stance till the prospects of sustained economic recovery is secured.“The easing of yield curves and the committing to keep interest rate low with ample liquidity are positive for the equity markets too,” Dua said. The consistency and continuity in the monetary policy stance is expected to support positive market sentiment, he said.
The gains in the sensex came on the back of a Rs 227-crore net buying by foreign funds and a Rs 381-crore investment by domestic funds, BSE data showed.
In its post-policy statement, the RBI said that to ensure congenial financial conditions for the economic recovery to gain traction, the central bank will buy gilts worth Rs 1 lakh crore during the current quarter. The first purchase under this plan would be for Rs 25,000 crore on April 15, 2021.
The central bank’s accommodative policy stance also led to a rally in the bond market with the yield on the benchmark 10-year gilts closing at 4 basis points (100bps = 1 percentage point) lower at 6.08%. The 30-year G-Sec yield also softened by 4bps to 6.74%, while yield on 10-year state loans and AAA-rated corporate bonds softened by 7bps to 6.73%.