Indian shares opened at record highs on Friday, driven by gains in state-run banks, as investors cheered a central bank decision to conduct a special open market operation to bring down long-term yields.
The Reserve Bank of India on Thursday said it would buy 100 billion rupees ($1.4 billion) worth of the current benchmark 10-year bond while selling four bonds maturing in 2020 for an equivalent amount.
This is the first time the RBI has conducted a special open market operation of this kind, similar to the ‘Operation Twist’ carried out in the United States near the start of the decade.
The benchmark 10-year bond yield fell sharply to 6.61 per cent by 0340 GMT from its previous close of 6.75 per cent.
The NSE Nifty 50 Index rose 0.24 per cent to 12,288.60 by 0355 GMT, while the S&P BSE Sensex index gained 0.25 per cent to 41,781.50.
The Nifty PSU Bank index, which tracks the country’s state-run lenders, added nearly 2.0 per cent. Shares of State Bank of India, the country’s largest lender, rose 1.8 per cent.
The Nifty Bank index edged up 0.3 per cent to an all-time high.
Meanwhile, shares in broader Asia hovered near 18-month highs as trade thinned in the run-up to Christmas.
Sentiment was also bolstered by Wall Street’s record gains on Thursday as US Treasury Secretary Steven Mnuchin said an initial US-China trade deal would be signed in early January.
In India, The Nifty IT index rose over 0.5 per cent, with Tata Consultancy Services Ltd gaining nearly 1.0 per cent.
The biggest laggard on the NSE Nifty was miner Vedanta Ltd with a more than 1.0 per cent drop.
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