BENGALURU - Indian shares extended gains on Wednesday as the central bank kept its key interest rates unchanged as expected and said economic prospects were steadily improving.
By 0443 GMT, the NSE Nifty 50 index had gained 1.25% to 17,389.45 and the benchmark S&P BSE Sensex had risen 1.32% to 58,386.99. The rupee weakened to 75.45 against the dollar after the decision.
"The (monetary policy) committee is of the view that reduction in COVID-19 infections, and vaccine coverage, are improving economic activity outlook," Reserve Bank of India Governor Shaktikanta Das said in his policy address.
Continued policy support is required for a durable economic recovery, he said, adding that, "We want to ensure a soft-landing that is well timed."
The blue-chip Nifty 50 and the Sensex both have fallen about 4% since the central bank's last meeting in October, weighed down by fears over high valuation and as investors waited for more clarity on just how much economic disruption the new variant might cause.
A Reuters poll of 50 economists earlier this month showed the Reserve Bank of India will likely hold its benchmark interest rate but expected the central bank to raise its reverse repo rate early next year and increase the repo rate the following quarter.
Among individual stocks, the Nifty IT index rose as much as 2.3%, led by Wipro Ltd and Infosys Ltd, up more than 2% each.
(Reporting by Vishwadha Chander and Shivani Singh in Bengaluru; Editing by Subhranshu Sahu) ((Vishwadha.Chander@thomsonreuters.com; Mobile: +91 7506036802; Twitter: https://twitter.com/vishwadha;))