Indian shares edge higher after cenbank keeps key rates unchanged

BENGALURU, Feb 10 (Reuters) - Indian shares edged higher on Thursday as the central bank kept key rates unchanged and said continued policy support was warranted given the inflation outlook and global uncertainties.

The Reserve Bank of India (RBI) surprised markets by leaving its key deposit rate unchanged against some economists' predictions of a hike to re-align it with short-term money market rates. read more

The central bank's monetary policy committee held the lending rate, or the repo rate (INREPO=ECI), at 4%. The reverse repo rate (INRREP=ECI), or the key borrowing rate, was also kept unchanged at 3.35%.

The RBI has held the key repo rate at record lows since May 2020 and reiterated time and again that it will remain supportive of growth and keep its stance accommodative until economic recovery is firmly entrenched.

The NSE Nifty 50 index (.NSEI) rose 0.27% to 17,511, as of 0445 GMT, while the S&P BSE Sensex (.BSESN) was up 0.27% at 58,622.30.

India's 10-year benchmark bond yield fell 4 basis points to 6.7610 after the policy decision, while the rupee weakened against the dollar to 75.0275.

Both the Nifty and Sensex have seen sell-offs this year after rising more than 20% in 2021, as central banks across the globe gear up to tackle high inflation and foreign investors exit emerging markets amid expectations for higher interest rates.

Rate-sensitive financial stocks edged higher after of the policy announcement. The Nifty Banking index (.NSEBANK), which had gained 8% this year by Wednesday's close, rose 0.5%.

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