By Bharath Rajeswaran
(Reuters) -Indian shares extended gains on Wednesday after the central bank met market expectations by keeping interest rates steady, and boosted financial stocks by easing rules for acquisitions lending.
The central bank maintained a rate pause for the second straight policy meeting, after 100 basis points of rate cuts in the first half of 2025, as it waited to see the impact of frontloaded rate cuts and consumption tax cuts amid lingering trade worries.
The Nifty 50 index rose 0.79% to 24,804.35 and the BSE Sensex index added 0.82% to 80,925.02, as of 12:11 p.m. IST. Both benchmarks had risen 0.25% each ahead of the RBI’s policy decision.
Fourteen of 16 major sectors advanced. High-weight financials and banks, gained about 1.4% each. Private banks jumped 1.8%, topping sectoral gains.
The RBI proposed to expand the scope of capital market lending by banks enable them to finance corporate acquisitons. It also proposed greater flexibility for banks to open and maintain accounts of borrowers and sought to remove a regulatory ceiling on lending against listed securities.
“Harmonisation of over 9000 compliances, a level-playing field for banks for capital market exposure and corporate acquisition, along with a dovish tone keeping the room open for future rate cuts, is in sync with the government’s push to stimulate the economy,” said Nilesh Shah, managing director at Kotak Mahindra Asset Management Company.
The realty index trimmed gains to 0.8% after rising 1.1% ahead of the rate decision.
“The real estate sector had hoped for a further cut to support housing demand, particularly in the affordable segment,” said Shishir Baijal, chairman and managing director of Knight Frank India.
The broader small-caps and mid-caps rose about 0.2% each.
Among stocks, Lupin jumped 3.2% after receiving the U.S. drug regulator’s approval for a drug to treat thrombosis and pulmonary embolism.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman and Mrigank Dhaniwala)
