The central bank’s Monetary Policy Commitee’s decision implies rate cuts are possible in the future if the need arises to support the economy hit by the Covid-19 crisis.
The 30-share BSE index zoomed 327 points or 0.81 per cent to close at 40,509, and the broader NSE Nifty rose 80 points or 0.67 per cent to settle at 11,914.
Top gainers in the sensex pack included ICICI Bank, Axis Bank, SBI, HDFC Bank, L&T and ONGC with their stocks rising as much as 4.04 per cent.
On the NSE platform, sub-indices Nifty PSU Bank and Nifty Bank jumped as much as 3.10 per cent.
The policy review outcome was as per expectations, but it was the good commentary on GDP outlook and the liquidity measures announced that cheered the D-Street, said Jimeet Modi, founder and CEO of Samco Group.
“All these proactive measures undertaken by the Indian central bank to revive growth and stimulate the economy will go down well with capital markets,” he added.
The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, RBI governor Shaktikanta Das said while announcing the MPC decisions.
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
Das said the Indian economy is entering into a decisive phase in the fight against coronavirus.
He also stated that the contraction in economic growth witnessed in the April-June quarter of the fiscal is “behind us”, adding that GDP was likely to turn positive at 0.5 per cent in the January-March quarter of the current financial year.
(With PTI inputs)