Nifty crosses 21000 for the first time all time high RBI policy repo rate decision

It is turning out to be a good day for investors on Dalal Street as the NSE Nifty 50 not only hit an all-time high but also crossed the 21,000 mark for the first time.

The 50-share index rose to an all-time high of 21,006.10 soon after Reserve Bank of India (RBI) Governor Shaktikanta Das announced that the central bank’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5 per cent, citing strong GDP growth and easing inflation.

Not just the Nifty 50, but the S&P BSE Sensex also hit an all-time high in early trade, reaching 69,888.33. As of 10:38 am, the Nifty 50 fell marginally below the 21,000 mark to trade at 20,987, while the Sensex traded at 69,814.27.

While the RBI MPC’s decision was widely in line with what economists had expected, investors seem to have gained more confidence from the central bank governor’s monetary policy speech.

During his speech, Governor Das highlighted that despite the ongoing global uncertainty, the Indian economy continues to “present a picture of resilience”.

He went on to say that the country’s GDP growth in Q2FY24, which came in at 7.6 per cent, “has exceeded all forecasts”.

Das also highlighted that the fundamentals of the Indian economy remain strong, with banks and corporate firms displaying healthier balance sheets, better fiscal consolidation, manageable external balance and robust forex reserves.

“These factors, combined with consumer and business optimism create congenial conditions for sustained growth of the Indian economy,” Das said.

Among other things, the RBI has also forecast FY24 by 50 basis points to 7 per cent, while leaving the inflation forecast unchaged.

“Although the magnitude of the GDP forecast upgrade exceeded our initial projections, all other declarations and positions remained largely consistent with our expectations. As of now, the RBI anticipates that liquidity conditions will remain stable. The policy was, on the whole, less hawkish than had been anticipated,” said Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers.

“We maintain our assessment that no rate reductions would occur until the latter part of fiscal year FY25. An upward adjustment to the GDP forecast would have a favourable effect on market sentiment,” he added.

The fact that the central bank’s policy decision was less hawkish than expected seems to have provided a boost to investors on Dalal Street, despite persisting volatility.