The benchmark Nifty was back to its record-breaking ways after taking a breather in the previous session, topping the 21,000-mark for the first time on December 8. The Nifty hit a high as the Reserve Bank of India (RBI) announced its decision to keep repo rate unchanged at 6.5 percent for the fifth time in a row. The move was in line with market expectations.
With today's gains, the Nifty also ended the week with a nearly 2 percent upmove.
The RBI's monetary policy committee also voted — five to one — to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target while supporting growth.
It raised its GDP growth forecast for FY24 to 7 percent from 6.5 percent, which ushered further optimism among investors.
“The December policy meeting was an anti-climax of sorts. In the run-up, there was considerable market uncertainty on the extent of hawkishness that the RBI would exude, particularly given the focus on tighter liquidity in the past two meetings. Instead the RBI surprised markets by choosing to not reprise its previous hawkishness, especially through the liquidity route," said Aurodeep Nandi, India Economist and Vice President at Nomura.
"Overall, we believe the RBI is firmly set on the course of policy pause for now but predict 100 basis points of cumulative policy easing starting from August 2024 as inflation moderates and growth headwinds gather," he added.
Also read: RBI MPC Highlights: GDP growth pegged at 7% for FY24, inflation forecast retained
Moreover, positive cues from global markets also aided sentiment for domestic equities.
The Nifty hit record 21,005.05 and the Sensex also scaled a lifetime high of 69,888.33 in the morning session. At close, the Sensex was up 303.91 points or 0.44 percent at 69,825.60, and the Nifty was up 68.20 points or 0.33 percent at 20,969.40. About 1,441 shares rose, 1,796 fell, and 73 remained unchanged.
The market momentum also remains strong as nearly 19 stocks on the Nifty hit their all-time highs in the last two-three sessions.
"The bullish undertone prevails in the market, and any correction in terms of price-wise or time-wise is anticipated to be short-term, which would be ideal for a healthier bull trend going ahead," said Sameet Chavan, Head of Research - Technical and Derivatives, Angel One
Nirmal Bang Institutional Equities CEO Rahul Arora, too, sees scope for more upside but advises caution. "Those who've made profitable investments might consider pocketing some gains," he said.
The Nifty has had a stellar run this month, so far, rallying over 4 percent, recording its best December since 2020.
The strength in the Nifty was also aided by gains in heavyweight banking stocks like HDFC Bank and ICICI Bank, which extended their upmove after the RBI's policy decision. Nine stocks on the Nifty Bank index were up, while three inched lower.
The Nifty Bank index also closed nearly a percent higher, 3.5 percent for the week.
Also Read | Banking shares trade higher after RBI holds repo rate at 6.5% for fifth consecutive time
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