After logging an all-time high of 50,687.51, the BSE Sensex ended up 358.54 points, or 0.7 per cent, to close at 50,614.29. The Nifty ended up 105.70 points, or 0.7 per cent, at 14,895.65 after touching an all-time high of 14,913.7 .
The Sensex and Nifty have gained over 9 per cent for the ongoing week after the Budget announcements, where the government focused on growth to boost the coronavirus pandemic-hit economy.
While the RBI is expected to keep rates unchanged on Friday, investors will look forward to remarks from the central bank on how it intends to keep liquidity in the system amid the recent upward pressure on bond yields on worries about the government’s higher-than-expected borrowing programme.
“RBI is facing a tricky situation. It has to ensure adequate liquidity and at the same time calm the bond market,” said Kunj Bansal, CIO, Karvy Capital. “It will be crucial for the RBI to send the right message to ensure that sentiment in the equity market is not affected.”
Edelweiss expects the RBI to maintain a status quo in the monetary policy review and said it will watch out for commentary on normalisation of the liquidity management framework. “The recovery is still nascent and the fiscal push/higher borrowings seen in the Budget warrant continued RBI support. Meanwhile, a dovish Fed, comfortable BoP (balance of payments) and domestic disinflation (more than anticipated) give the RBI elbow room to keep monetary conditions easy for long,” said Edelweiss. The brokerage does not see the RBI rushing to withdraw liquidity.
ITC was the top Sensex gains, up 6.1 per cent. SBI rose 5.7 per cent after the bank’s December quarter results beat expectations. Bajaj Finance, ONGC, M&M, Kotak Mahindra Bank and Bajaj Finserv gained 2-5 per cent.
“I won’t be surprised if there is a correction. Markets are waiting for a package from Biden and once that comes through, all positives would have come in,” said Andrew Holland, CEO, Avendus Capital Alternative Strategies.
