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Sensex, Nifty end higher as RBI rolls out liquidity measures

A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, February 1, 2020. REUTERS/Francis Mascarenhas/Files

BENGALURU (Reuters) - Indian shares ended higher on Friday, led by bank stocks, after the central bank kept interest rates steady to counter a stubbornly high inflation, while unveiling steps to boost liquidity and lending in a pandemic-hit economy.

The Nifty rose 0.67% to 11,914.20 and the Sensex gained 0.81% to 40,509.49. The indexes have added more than 4% this week.

The Reserve bank of India said it would resort to on-tap long-term repo operations and open market bond purchases among others to ensure liquidity in the banking system.

The NSE Bank Index rose as much as 3.1% to its highest level since Sept. 3 after the central bank eased capital requirements on home loans to spur lending to the real estate sector.

The move will lead to more money on the table for housing finance companies and allow them to lend more, according to Umesh Mehta, head of research at Samco Securities, Mumbai.

Reserve Bank of India Governor Shaktikanta Das said the country’s gross domestic product may break out of the coronavirus-induced contraction and turn positive by the fourth quarter of 2020.

Shares of HDFC Bank, ICICI Bank and Axis Bank and State Bank of India were among the top gainers on the blue-chip Nifty 50, gaining between 3.6% to 4.1%.

The Nifty IT index ended 0.65% higher after Wipro Ltd gained 4.4% to be the top gainer on the Nifty 50 index.

Reporting by Philip George in Bengaluru; Editing by Arun Koyyur