India's Nifty flat, Sensex holds gains after RBI rate pause

India’s Nifty 50 traded largely unchanged while the Sensex rose on Wednesday after the central bank held rates, as it awaited more data to assess the impact of elevated oil prices and a monsoon shortfall on inflation.

The Nifty was up 0.1% at 24,639.30, while the Sensex added 0.53% to 78,847.15 as of 11:00 a.m. IST.

Governor Sanjay Malhotra said inflation is expected to peak in the current September quarter before easing, while noting that the economy outperformed expectations in the June quarter.

“The stronger macroeconomic fundamentals of domestic economy are helping navigate global shocks resolutely,” Malhotra said, adding that measures to attract capital inflows will support foreign flows.

The central bank’s concessional swap facility, announced in June, has drawn over $40 billion in forex inflows through July 31.

“The RBI’s decision reflects a calibrated approach towards balancing growth with macroeconomic stability,” said Sandeep Agarwal, CEO and CIO of Modulus Alternatives.

“With inflationary pressures being closely monitored and global economic uncertainties continuing to evolve, maintaining the status quo provides stability and allows the impact of previous policy measures to transmit further through the economy,” Agarwal said.

The benchmarks also continued to show a divergence for the third straight session since the launch of a new auction mechanism for stocks with futures and options contracts.

India’s markets regulator sees no structural or design flaws in the new auction system and has set no timeline for a review, Reuters reported on Wednesday, citing a source.

Eleven of the 16 major sectors logged gains. The broader small-caps and mid-caps rose 0.8% and 0.4%, hitting all-time highs.

High weightage financials and banks traded flat. Realty surged 2.4% and auto stocks gained 1.5%, respectively.