Benchmarks extend gains; Nifty near 14,850

Key equity indices further extended gains and hit the day's high in mid-morning trade. Metal stocks extended their winning streak for eight day. The Nifty was trading near the 14,850 mark. Buying emerged after the RBI maintained status quo on interest rates, while announcing its latest monetary policy outcome.

At 11:22 IST, the barometer index, the S&P BSE Sensex, was up 552.45 points or 1.12% to 49,753.84. The Nifty 50 index added 164.65 points or 1.12% to 14,848.15.

In broader market, the S&P BSE Mid-Cap index gained 0.64% while the S&P BSE Small-Cap index rose 1.10%.

The market breadth was strong. On the BSE, 1721 shares rose and 841 shares fell. A total of 190 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 132,300,599 with 2,871,781 deaths.

India reported 843,473 active cases of COVID-19 infection and 166,177 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

The government on Tuesday said India's COVID-19 cases were "spreading faster than last time", and the next four weeks would be "critical" in controlling the second wave of the disease.

RBI policy:

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), announcing its first bi-monthly monetary policy of the 2021-22 fiscal today, voted to leave policy repo rate unchanged at 4%. MPC maintained accommodative stance in unanimous vote.

RBI Governor Shaktikanta Das said that the CPI inflation trajectory likely to be subject to both upside and downside pressures. The central banker further said that the projection for CPI inflation has been revised to 5% in Q4 of financial year 2020-21, 5% in Q1 FY22, 5.2% in Q2, 4.4% in Q3 and 5.1% in Q4 with risks broadly balanced.

While the RBI maintained its FY22 real GDP growth projection at 10.5%, the RBI Governor said that the recent surge in COVID-19 infections has given greater uncertainty on growth outlook.

In an endeavour to sustain congenial financing conditions, the RBI has decided to put in place a secondary market G-sec acquisition programme (G-SAP). The central bank has decided to announce a G-SAP of Rs 1 lakh crore in Q1FY22.

The RBI also extended the deadline for TLTRO on-tap liquidity scheme to 30 September 2021 from 31 March 2021. It has also decided to conduct such auctions of longer tenors, following the success of variable reverse repo rate auctions. The amount and the tenor of these auction will be announced later by the RBI.

The central bank will provide liquidity support of Rs 50,000 crore to all-India financial institutions and it has also proposed to constitute a committee to comprehensively review the functioning of asset reconstruction companies.

The RBI has decided to accept the recommendations of an advisory committee that reviewed ways and means advance limits to states and union territories. The aggregate ways and means advance limit of all states and UTs will be enhanced to Rs 47,010 crore, an increase of 46%.

Buzzing Index:

The Nifty Metal index rose 1.36% to 4,345.20, advancing for eight consecutive day. The index has added 16.88% in eight sessions.

APL Apollo Tubes (up 4.64%), MOIL (up 3.82%), Hindustan Copper (up 3.07%), Hindustan Zinc (up 2.97%), JSW Steel (up 2.54%) and Hindalco Industries (up 2.20%), Welspun Corp (up 1.96%), Tata Steel (up 1.66%), NALCO (up 1.43%), Coal India (up 1%) and NMDC (up 0.85%) advanced.

Global Markets:

Most Asian stocks were trading higher on Wednesday. U.S. stocks fell from record levels on Tuesday as the recent rally driven by signs of strong economic rebound took a pause.

On Tuesday, California Governor Gavin Newsom said that the state will reopen its economy by June 15 provided that coronavirus vaccine and hospitalization cases remain stable.

The IMF on Tuesday projected an impressive 12.5% growth rate for India in 2021, stronger than that of China, the only major economy to have a positive growth rate last year during the COVID-19 pandemic. The Indian economy is expected to grow by 6.9% in 2022.

The IMF revised up its forecast for the world economy. On Tuesday, the organization said it expects growth at 6% in 2021, up from a January prediction of 5.5%, and Chief Economist Gita Gopinath said that despite lingering uncertainties around the pandemic, a way out of this health and economic crisis is increasingly visible.

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