Domestic equity benchmarks staged their best winning streak of 2020 as benchmark indices extended gains to a seventh straight session on Friday, after the Reserve Bank of India announced a series of measures to boost liquidity in the banking system. The S&P BSE Sensex index rose as much as 390 points and the broader NSE Nifty 50 benchmark reclaimed its important psychological level of 11,900. In the last seven sessions, the Sensex has rallied 6.68 per cent and Nifty has surged 6.16 per cent.
The Sensex ended 327 points or 0.81 per cent higher at 40,509 and Nifty climbed 80 points to close at 11,914.
The central bank kept the key policy rates on hold citing inflationary pressures, but vouched to stay "accommodative" as long as necessary to rescue the economy from the damage caused by the coronavirus pandemic.
RBI Governor Shaktikanta Das announced on-tap Targeted Long-Term Repo Operations (TLTRO) with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate.
"The scheme will be available up to March 31, 2021 with flexibility with regard to enhancement of the amount and period after a review of the response to the scheme," the RBI chief said in a virtual address to the media.
"Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial papers, and nonconvertible debentures issued by entities in specific sectors over and above the outstanding level of their investments in such instruments as on September 30, 2020," he added.
The RBI's status quo on policy rates was in line with market expectations, according to analysts.
The RBI "continued to highlight that it will watch the developments closely and continue with its accommodative stance as and when needed for 2020 as well as 2021", said Amit Shah, head of India Research, BNP Paribas.
The RBI Governor said the country's gross domestic product may break out of the coronavirus-induced contraction and turn positive by the fourth quarter of 2020.
Banking and financial services shares witnessed strong buying interest following the RBI Governor's announcement on additional liquidity for the system. The Nifty PSU Bank index was the top sectoral gainer, climbing up 3.1 per cent. The Nifty Bank, Private Bank, Financial Services and IT indices rose 0.65-2.8 per cent each. On the other hand, pharma, media, metal, FMCG and real estate shares witnessed selling pressure.
Mid- and small-cap shares also witnessed selling pressure, as the Nifty Midcap 100 and Nifty Smallcap 100 indices fell 0.3 and 0.2 per cent respectively.
Wipro was the top Nifty gainer, rising 4.4 per cent to close at Rs 375 apiece on the BSE. ICICI Bank, Axis Bank, State Bank of India, HDFC Bank, Larsen & Toubro, GAIL India, Shree Cements, ONGC, Hero MotoCorp and Coal India were also among the gainers.
On the flipside, Grasim Industries, Hindalco, UPL, Sun Pharma, SBI Life, Asian Paints, Nestle India and Tata Motors were among the losers.
Overall market breadth was negative, as 1,452 shares ended lower against 1,232 that rose on the BSE.
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