By Urvashi Valecha
Banking stocks drove markets to record highs on Friday, as investors cheered the Reserve Bank of India’s decision to hold the rates. The Nifty rose 124.65 points (0.95%) to cross the 13,200 mark for the first time ever. It closed at 13,258.5. The Sensex rallied 446.9 points (1%) to close at 45,079.55. The Nifty Bank rose 2% during the last hour of trade.
The markets cheered the announcement as it was on expected lines. Additionally, the accommodative stance by the central bank and unchanged interest rates also helped improve the sentiment.
Amar Ambani, senior president and head of research – institutional equities, Yes Securities, said: “The fact that liquidity remains high while growth is gaining traction makes us believe that RBI will adopt a wait-and-watch approach for next few months. Nevertheless, the MPC reiterated its accommodative stance given the transitional phase the economy is going through, in terms of recovery from the pandemic.”
After the credit policy announcement, banking stocks started witnessing substantial buying and the major gainers on the banking index were Bandhan Bank, ICICI Bank, State Bank of India, RBL Bank and IndusInd Bank, rising by 4.7%, 4.49%, 3.4%, 2.4% and 2.2%. With Friday’s rally, the Nifty Bank was up 1.4% for the week while the Nifty rose 2.2%.
Dhiraj Relli, MD and CEO of HDFC Securities, said: “The MPC feels that inflation is likely to remain elevated, with some relief in the winter months from prices of perishables and bumper kharif arrivals and has raised inflation projections for H2 fiscal year (FY) 21 and H1FY22. While the Q4 growth projection is below expectations, the H1FY22 projections bring in a sense of relief.”
Foreign portfolio investors (FPIs) have poured in $1 billion into equities till December 3. This comes after FPI buying touched a new record in November. According to provisional data on the exchanges, FPIs bought stocks worth $395 million whereas domestic institutional investors sold stocks worth $262.8 million.
The futures and options segment on the NSE saw a turnover worth Rs 18.03 lakh crore while the cash segment witnessed a turnover of Rs 72,161.14 crore.