Share markets rise on expectations of CRR cut by RBI later this week

Indian shares rose on Wednesday, led by financials on growing expectations of a cut in cash reserve ratio (CRR) by the Reserve Bank of India (RBI) later in the week.

The NSE Nifty 50 climbed 0.32 per cent to 24,534.65 points, as of 11:02 a.m. IST, while the BSE Sensex gained 0.37 per cent to 81,145.54. The benchmarks are on track to extend their three-session winning streak.

Eight of the 13 major sectors advanced. The broader, more domestically focussed small- and midcaps added about 0.5 per cent each.

The RBI is expected to hold rates steady at its policy meeting on Friday due to elevated inflation, but its commentary will likely be pivotal for markets following a sharp growth slowdown in the September quarter.

Analysts have also pointed to the growing possibility of restoring CRR - cash reserves that banks are required to maintain with the RBI and can use to maintain liquidity in the economy - to 4 per cent from 4.5 per cent.

A potential slashing of the CRR could provide margin support for lenders, Citi analysts said.

The bets of a cut helped financials rise 0.9 per cent, with top-weighted HDFC Bank gaining 1.2 per cent. State-owned lenders also advanced 1 per cent.

"Even if the RBI holds the repo rate cuts till Feb, we will expect a neutral to dovish tone, with measures like restoring CRR... to symbolically start easing," Ankita Pathak, Chief Macro and Global Strategist at Ionic Wealth said.

The IT index rose 0.6 per cent after data showed U.S. job openings increased in October, signalling strength in the U.S. economy, a key geography for the sector.

Meanwhile, domestic defence firms jumped after the country's defence acquisition council approved five proposals worth about $2.6 billion to enhance the armed forces' operational capability.

Hindustan Aeronautics, Bharat Electronics, Bharat Dynamics and Data Patterns gained between 0.4 per cent and 5 per cent.

Newly-listed Swiggy added 2.5 per cent after at least three brokerages remained positive on the online food delivery platform's future earnings outlook.