Sensex rebounds 412 pts, Nifty reclaims 17,750 after RBI policy as market halts 3-day losing streak

RBI Governor Shaktikanta Das gave first hints of gradually shifting away from its pandemic-era monetary policy. The central bank's policy action was widely viewed along expected lines.

The central bank's Monetary Policy Committee raised its inflation forecasts and lowered GDP projections for the year ending March 2023.

"The RBI's measures, being in line with market expectations, led to a relief rally. The focus has now shifted to the earnings season, which will start next week. The outlook for the banking sector is robust due to a rapid bounce in credit growth and an improvement in balance sheet," said Vinod Nair, Head of Research at Geojit Financial Services.

Among blue-chip stocks, Grasim, ITC, SBI Life, JSW Steel, Adani Ports, Mahindra & Mahindra and Dr Reddy's -- closing between 2.6 percent and 6.1 percent higher -- were the top gainers. On the other hand, Cipla, Tech Mahindra, Maruti Suzuki, NTPC and HCL Tech -- declining between 0.6 percent and 2.3 percent -- were the worst hit among the eight laggards in the Nifty50 pack.

Reliance Industries, ITC, ICICI Bank and Kotak Mahindra Bank were the biggest contributors to the gain in both main gauges.

Globally, investors kept an eye out for news flow on the ongoing Russia-Ukraine war and the recent COVID outbreak in China.

Geopolitical uncertainty:

Global equities clocked gains cautiously. The European Union formally adopted its fifth package of sanctions against Russia over Ukraine. The measures included bans on imports of products such as coal, wood and chemicals.

Crude oil: Oil rates edged higher but stayed far below their recent peaks. Brent was last up 0.7 percent at $101.3 a barrel, and WTI up 0.9 percent at $96.9 a barrel. India meets the lion's share of its demand for oil through imports.

Higher interest rates: The RBI has though kept the interest rates unchanged in its latest bi-monthly policy, it is widely expected to give them a lift of 50-100 basis points this year. Last month, the Fed announced its first hike in interest rates in more than three years.

Accelerating inflation: The RBI raised its forecasts for inflation for the year ending March 2023 and brought the focus back on consumer prices from growth -- as it was before the pandemic. Businesses in India, as well as the world, continue to struggle against a sustained rise in commodity rates.

FII outflows: Foreign institutional investors have been net sellers of Indian shares for six months in a row. FII outflows from October through March have stood at Rs 2.3 lakh crore, provisional exchange data shows, though DIIs have made net purchases to the tune of Rs 1.7 lakh crore.

Concerns over slower-than-expected economic recovery: The RBI lowered its GDP growth forecasts for FY23. It now sees the country's GDP to expand 7.2 percent for the year, as against its estimate of 7.8 percent in its February policy review.

High equity valuations: Experts have time and again flagged expensive valuations of Indian equities.

COVID: Investors are once again tracking updates about the pandemic closely ever since rising infections triggered curbs in a major industrial belt in China.

A majority of stocks from interest rate-sensitive spaces, such as financial services, auto and realty, held on to gains after RBI announcements. The Nifty Bank rose half a percent for the day.

The Nifty Metal was the top gainer among NSE's sectoral indices, finishing the day 2.1 percent higher. JSW Steel rose 3.9 percent and Tata Steel 1.2 percent.

The Nifty IT edged 0.1 percent lower -- the only index to slip into the red, ahead of the onset of the earnings season due next week.

Broader markets strengthened, with the Nifty Midcap 100 index closing one percent higher. Its smallcap counterpart climbed up 0.4 percent.

In the midcap and smallcap segments, Bharat Dynamics, Varroc Engineering, CEAT and Hathway Cable -- rising around 9-15 percent -- were the top gainers. On the flipside, RBL Bank, Escorts, Solara Active and Aarti Drugs -- declining 2-7 percent -- were the top losers.

Overall market breadth favoured the bulls, with an advance-decline ratio of 2:1 as 1,453 stocks rose and 645 fell on NSE.

European shares followed Asian markets higher amid gains in financial and commodity spaces. The pan-European Stoxx 600 index was up one percent at the last count and set to finish the week higher.

S&P 500 futures were up 0.2 percent, suggesting a positive start ahead on Wall Street.