Indian Shares Rebound As RBI Eases Lending Rules
India’s stock benchmarks snapped their longest losing streak in seven months on Wednesday, lifted by banking stocks after the Reserve Bank of India (RBI) relaxed rules on lending to capital markets and large corporations.The central bank, which held interest rates steady for a second consecutive meeting, announced 22 measures to boost credit in Asia’s third-largest economy. These included allowing banks to fund acquisitions and raising the borrowing limit for individuals subscribing to initial public offerings (IPOs).
The Nifty 50 closed 0.92 per cent higher at 24,836.30, while the BSE Sensex gained 0.89 per cent to 80,983.31. Both indices had slipped about 3.2 per cent over the previous eight sessions.
Fifteen of the 16 major sectoral indices advanced, with financials and banks rising 1.4 per cent and 1.3 per cent, respectively. The private bank index jumped 2 per cent, supported by heavyweight lenders HDFC Bank and ICICI Bank, which rose 1.5 per cent and 1.8 per cent.
“The rebound reflects improving sentiment and hints at early signs of a potential shift in market direction,” said Vinod Nair, Head of Research, Geojit Investments.
Investor sentiment was also buoyed after the Indian government approved a Rs 100 billion (£960 million) pay rise for federal employees, raising hopes of stronger consumption demand.
Tata Motors rallied 5.6 per cent, its best performance in more than 14 months, after setting a record date for the demerger of its commercial vehicle unit and outlining a positive growth outlook.
Small- and mid-cap shares also advanced, with the broader indices up 1.1 per cent and 0.9 per cent.
Indian markets will be closed on Thursday for a local holiday and will reopen on Friday.
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