Sensex, Nifty scale record peak on high risk appetite; financials lead

 Indian shares hit all-time highs on Wednesday, continuing their rally into a fifth session as upbeat global factors added to investor risk appetite ahead of a central bank policy meeting outcome.

The Reserve Bank of India (RBI) is likely to cut rates for the second consecutive time this year when its three-day policy meeting ends on Thursday, a Reuters poll of 70 analysts found.

More than 85 percent the economists polled forecast the RBI would cut its benchmark lending rate, the repo rate, to 6.00 percent. Some analysts also found reason for the RBI to slash rates by 50 basis points and why such a move could prove beneficial for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) retain power at the centre.

“There is a possibility of the RBI cutting rates by 50 BPS because June-September is a slack period for credit growth and reducing lending rates would boost it,” said R.K. Gupta, managing director at Taurus Asset Management.

“This could also help the government show better GDP and IIP (index of industrial production) numbers, which has been under pressure.”

BJP has faced criticism from opposition parties and economists for having allegedly manipulated economic growth figures and suppressing the release of jobs data to show the economy has performed better under his leadership.

The broader NSE Nifty was up 0.15 percent at 11,730.35 as of 0606 GMT, while the benchmark BSE Sensex was 0.30 percent higher at 39,172.87.

Indian shares also tracked Asian peers which scaled 7-month highs after White House economic adviser Larry Kudlow said that Washington expects “to make more headway” in trade talks between the U.S. and China this week.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.22 percent.

Shares of Tata Steel Ltd rose as much as 2.7 percent, after ratings agency S&P Global revised outlook on the steelmaker to ‘positive’ from ‘stable’.

Financials were among the top gainers with Indiabulls Housing Finance Ltd, up 5 percent, and IndusInd Bank, trading 2 percent higher, leading.

Among top losers, beleagured carried Jet Airways Ltd fell 4 percent after it grounded another 15 aircraft on Tuesday due to non-payment of dues to lessors.

Oil marketers Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd fell between 2.1 percent and 4.2 percent after Brent futures hit near five-month highs.