Sensex opens 0.21% higher at 58,418; Nifty above 17,400 ahead of RBI decision


Reuters | | Posted by Sharmita Kar

Indian shares edged higher on Friday ahead of an expected rate hike by the country’s central bank, which is aiming to tame persistently high inflation in Asia’s third-largest economy.

India’s annual consumer inflation remained above the 7% mark in June and beyond the Reserve Bank of India’s (RBI) upper tolerance limit of 6% for the sixth month in a row.

The NSE Nifty 50 index was up 0.23% at 17,421.35, as of 0346 GMT, and the S&P BSE Sensex rose 0.21% to 58,418.86.

The RBI has raised rates twice since May, with a 40-basis-point hike at an unscheduled meeting, followed by 50 basis points in June.

Economists polled by Reuters expected the central bank to hike rates on Friday, but they were split widely between 25 basis points and 50 basis points.

The Indian rupee firmed ahead of the monetary policy decision, supported by overnight weakness in oil prices and the dollar.

“While declining international commodity prices are offering some reprieve, we think elevated inflation rates will continue to warrant some caution for the (RBI) policy outlook,” Rahul Bajoria, chief India economist at Barclays, said.

The central bank will continue calibrating policy to preserve and foster macroeconomic stability while bringing down inflation, RBI governor Shaktikanta Das said last month, adding that there could be some respite from rising prices in the coming months.

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