Indian stocks in green ahead of RBI monetary policy outcome
Oct 06, 2023
New Delhi [India], October 6 : Indian stock indices extended gains from the previous session, with financial market participants closely monitoring the outcome and the policy stance of the central bank RBI to be announced at 10 am Friday, for fresh cues.
Benchmark indices -- Sensex and Nifty -- were 0.3 per cent higher each at the opening bell today.
The stock market, after experiencing downs throughout the week, managed to achieve green on Thursday, maintaining its positive momentum and ending on a high note. At the close of the trading session, the Sensex recorded a gain of 413.56 points, reaching a closing figure of 65,631. Similarly, the Nifty surged by 109.65 points to finish at 19,545.75.
The three-day bi-monthly monetary policy committee (MPC) meeting of the RBI began on Wednesday.
"RBI Governor Shaktikanta Das is expected to maintain a hawkish stance on inflation and is unlikely to signal any rate cuts. This caution is driven by concerns surrounding high inflation and its potential adverse impact on economic growth," said Choice Broking.
RBI typically conducts six bi-monthly meetings in a financial year, where it deliberates interest rates, money supply, inflation outlook, and various macroeconomic indicators.
RBI in its past three meetings - April, June, and August -- held the repo rate unchanged at 6.5 per cent, and a section of experts are of the view that the status quo will remain. The repo rate is the rate of interest at which RBI lends to other banks.
With sticky retail inflation - breaching the MPC's upper threshold of 6 per cent and the US Fed's persisting hawkish stance, the RBI is most likely to retain the repo rate unchanged for the fourth time.
Barring the latest third straight pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Headline inflation in India rose to 7.8 per cent in July due to a surge in prices of food items like wheat, rice and vegetables, to later fall to 6.8 per cent in August. Inflation data for September is due in next two-odd days.
