Financials, IT drive Indian shares higher ahead of central bank policy decision

Indian shares advanced on Thursday as U.S.-focused IT stocks jumped on a rosy picture of the U.S. economy, while financials extended their rally to a fifth session on hopes of domestic policy easing.

The benchmark NSE Nifty 50 jumped 0.98% to 24,708.4, while the BSE Sensex added 1% to 81,765.86, logging gains for five straight sessions.

IT companies, which earn a significant share of their revenue from the U.S., rose about 2% after Federal Reserve Chair Jerome Powell said the U.S. economy remained stronger now than expected in September when the central bank began cutting interest rates.

High-weightage financials reversed course from a 0.9% drop to finish 0.7% higher. They have added about 3.4% in five sessions on optimism over likely monetary policy easing.

The Reserve Bank of India’s policy decision is due on Friday. Since data last Friday showed India’s economic growth slowed to a seven-quarter low of 5.4% last quarter, investors expect some form of policy easing.

Indian shares inch higher led by financials; Reliance, auto cap gains

But the question is whether that will be via a rate cut, or by lowering the CRR, which benefits banks.

“The market is expecting easing of policy, driving momentum overall and in state-owned banks, private banks, and financial services specifically, in recent days,” Gaurav Garg, Research Analyst at Lemonn Markets Desk said.

“However, any deviation from these expectations could potentially disrupt the momentum and trigger some profit booking.”

Eleven of the 13 major sectors advanced.

The broader, more domestically focused smallcaps and midcaps rose 0.8% and 0.6%, respectively.

Among individual stocks, Zomato and Swiggy rose 4.6% and 4.3%, respectively, after Bernstein forecasted steady growth for the online food delivery industry.

Indraprastha Gas jumped about 6.5% after it said it would consider a bonus share issue on Dec. 10.