Nifty and Sensex Extend Weekly Gains to 2%, RBI Holds Rates Steady

Arjun Pandit
08 Dec, 2023
Mumbai

Stocks in Mumbai traded higher after the central bank left its key lending rate unchanged and revised its economic growth forecast.

Two popular benchmark indexes added more than 0.3%, and the Reserve Bank of India is widely expected to hold rates steady for the third time in a row.

The Reserve Bank of India left its repo rate, the reference rate used for loan products, at 6.5%.

The central bank also revised its economic growth estimate for the fiscal year to 7.0% from the previous estimate of 6.5%, citing strong domestic economic fundamentals but cautioning against elevated inflation.

The Reserve Bank of India held its consumer price inflation forecast at 5.4% but cautioned that core inflation is still high and inflationary forces are still stronger than preferred by the central bank.

Crude oil edged slightly higher, but the commodity is set to close down 5% in the week on rising global supplies.

In overnight trading, U.S. market indexes advanced after tech stocks rebounded following Google's release of its most advanced generative artificial intelligence product, Gemini.

The yield on U.S. 10-year Treasury notes dropped below 4.20% and eased to a low last seen in September.

Closer to home, the yield on a 5-year Indian government bond held firm at 7.24% ahead of the RBI's rate decision.

In other news in Asia, Japan's economy contracted at a 2.9% annual pace in the third quarter compared to the preliminary estimate of 2.1%, following the downwardly revised growth of 3.6% in the second quarter, the Cabinet Office reported Friday.

The annual pace of decline was the first in a year and the largest fall since the peak of the pandemic in the second quarter of 2020.

 

India Indexes and Yields

Two popular benchmark indexes are set to close higher for the sixth week in a row with a weekly gain of about 1.9%.

The Sensex index increased 164.08 points to 69,685.77, and the Nifty index rose 55.60 points to 20,956.75.

On the Mumbai stock exchange, 200 stocks traded at their 52-week highs and 12 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds held firm at 7.24%, and the Indian rupee hovered near ₹83.34 against the U.S. dollar.

The gold price increased by 0.06% to ₹62,506 per ten grams, and silver rose by 0.4% to ₹74,600 per kilo.

Crude oil increased by 1.4% to ₹5,885 per barrel, and natural gas fell by 0.7% to ₹216.30 per thermal unit.

 

India Stock Movers

Container Corporation of India added 0.5% to ₹846.75 after the company signed an agreement with NTPC Vidyut Vyapar Nigam for setting up solar power projects at CONCOR terminals.

NTPC jumped 1.9% to ₹289.25.

REC jumped 2.2% to ₹403.50 on reports that the company is looking to raise as much as ₹6,000 crore through two bond offerings.

Zomato Ltd. gained 1.4% to ₹122.15 on a report that Japan-based Softbank is looking to sell a 1.1% stake in the delivery service company.

Olectra Greentech advanced 2.2% to ₹1,255.10 after the company signed a contract to deliver 40 electric buses.

Spicejet declined 1.3% to ₹51.68 on a report that the company is looking to raise additional capital, including a stock offering.

Sugar stocks declined after the government barred companies from making ethanol using sugarcane juice but permitted the use of molasses.

The sugarcane crop is down this year after uneven monsoon rains, and the government issued the directive as sugar supply is barely expected to meet the annual demand of 28 million tons.

About 25% of sugarcane juice production is used to make ethanol, and sugar production in the first two months of this crop cycle ending in November declined by 10.5%.