Markets at mid-day trade: Sensex, Nifty up nearly 2% after RBI policy decision

Equity benchmarks added to their morning gains in the mid-day trade buoyed by the in-line monetary policy outcome. At around 1 pm, Nifty 50 traded higher by 1.67 per cent or nearly 400 points at 23,204, while Sensex climbed 1,320 points or 1.74 per cent to 76,400 levels.

The three-consecutive day of gains has taken the markets to pre-exit poll levels with the total market-cap in today's trade moving above the m-cap recorded prior to the exit poll outcome on Friday.

Sectorally, while all the indices traded in the green, the IT index emerged as the outlier with gains of over 3 per cent, followed by the metal and realty pack. The Indian IT sector has been buzzing for the last few sessions amid strength in the US market indices, which are heavily weighted towards information technology (IT) companies, creating a ripple effect on IT stocks in India.

The Reseve Bank of India in its monetary policy outcome revealed today maintained status quo on key policy rates for the eighth straight time citing a favourable inflation-growth balance. Furthermore, while the RBI Governor-led MPC revised its GDP outlook for the ongoing FY 2024-25 higher to 7.2 per cent as against 7 per cent earlier, it clearly stated that the RBI's policy rate action as against perception will largely depend on the intrinsic factors and it will not wait for the US Fed to trim rates.

All interest rate-sensitive sectors continued to add to morning gains, with Nifty Realty index leading the basket. At the time of writing the copy Nifty Realty and Nifty Auto were up nearly 1.6 per cent, while Nifty Bank was up 1.14 per cent.

Dr. V K Vijayakumar, Chief Investment, Strategist, Geojit Financial Services noted that MPC’s decision to keep policy rates unchanged, though expected, has a surprise element since 2 members out of 6 were in favour of the rate cut. This means the number of members in favour of a rate cut is increasing. So a rate cut is likely in the next meeting. Another positive from the Governor’s speech is the upward revision in the FY25 GDP growth rate to 7.2% from 7% earlier. This augurs well for corporate earnings and, therefore, for the stock market, he added.