BENGALURU, Oct 9 (Reuters) - Indian shares rose on Friday after the country’s central bank kept interest rates unchanged in the face of a stubbornly high inflation, while also retaining its “accommodative” monetary policy stance.
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.
The NSE Nifty 50 index rose 0.5% to 11,896.95 as of 0523 GMT, while the S&P BSE Sensex was up 0.60% at 40,424.84.
“(RBI’s decision) was in line with market expectation, it 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.
All 66 respondents in a Reuters poll conducted ahead of the meeting said they expect the repo rate to be unchanged at 4.0% as the central bank looks to curb high inflation even as it tries to lift the economy from its worst contraction ever.
While the central bank has slashed rates by 115 basis points since late March in response to the COVID-19 pandemic, which caused Asia’s third largest economy to shrink by nearly a quarter in April-June, analysts have called for more fiscal stimulus to revive the economy.
Shares of Tata Steel Ltd rose 1.2% after the company’s steel production volumes for India during the second quarter came in at 4.59 million tonnes, up 54% from the prior quarter.
Shares of Lakshmi Vilas Bank gained as much as 16.3% after the lender struggling with bad loans and governance issues said it got a non-binding offer from Clix Group. (Reporting by Chris Thomas and Philip George in Bengaluru; Editing by Arun Koyyur)
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