Indian shares edged higher on Tuesday as the central bank left the door open for more monetary easing after keeping the rates on hold as widely expected, while the broader sentiment was also supported by strong gains in Asian markets.
The Reserve Bank of India kept its key lending rate unchanged at 6.75 per cent, leaving the door open for more easing but making that dependent on meeting a challenging inflation target for 2017.
Sentiment was also supported after Asian shares rallied on private manufacturing data showing activity contracted last month at a slower pace than in October.
The 30-share BSE index Sensex ended higher by 23.74 points or 0.09 per cent at 26,169.41 and the 50-share NSE index Nifty ended up by 19.65 points or 0.25 per cent at 7,954.90.
Among BSE sectoral indices, metal index gained the most by 3.18 per cent, followed by healthcare 1.07 per cent, FMCG 1.07 per cent and PSU 0.97 per cent. On the other hand, auto index was down 0.58 per cent, followed by consumer durables 0.34 per cent, banking 0.29 per cent and TECk 0.22 per cent.
Top five Sensex gainers were Vedanta (+4.66%), Dr Reddy's (+3.31%), Tata Steel (+3.3%), Coal India (+3.27%) and Hindalco (+3.24%), while the major losers were Bharti Airtel (-3.53%), GAIL (-1.79%), Axis Bank (-1.54%), Tata Motors (1.41%) and Infosys (-1.08%).
A report by SMC Global said: "Asian stocks rose after Monday's selloff as investors awaited Chinese factory data and financial shares climbed. US stocks closed lower Monday, the last day of trade for November, as investors eyed retail results and readied for key data and central bank comments later in the week. After reporting decreases in US pending home sales in the two previous months, the National Association of Realtors (NAR) released a report showing a slight uptick in pending sales in the month of October. NAR said its pending home sales index inched up by 0.2 per cent to 107.7 in October from an upwardly revised 107.5 in September. Economists had expected the index to climb by 1.0 per cent."
European shares edged higher on Tuesday, with UK-listed banks gaining after the Bank of England announced the results of its bank “stress tests’’ and said credit conditions in the country had largely recovered from the financial crisis.