Sensex falls 215 points in volatile trade after RBI’s rate hike; Nifty below 16,400


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Sensex 215 points, Nifty below 16,400

Equity benchmarks extended their fall for the fourth straight session on Wednesday, with the Sensex falling 214.85 points after the Reserve Bank raised key interest rates by 50 basis points. The steady flow of foreign funds and rising crude oil prices have also affected the market.

The 30-share BSE benchmark fell 214.85 points, or 0.39 percent, to 54,892.49. During the day, the benchmark reached a high of 55,423.97 and a low of 54,683.30. The broader NSE Nifty fell 60.10 points, or 0.37 percent, to 16,356.25.

The EMIs on home, car and other loans will rise after the Reserve Bank of India (RBI) hiked key interest rates by 50 basis points on Wednesday, the second such rise in five weeks, to curb price rises that hurt consumers. In the near term

As inflation continues to hover above the tolerance level of 6 per cent, the RBI’s six-member rate-fixing panel has unanimously raised the repo rate lending rate by 50 basis points to 4.90 per cent, Governor Shaktikant Das said.

From the Sensex pack, Bharti Airtel, ITC, Reliance Industries, Asian Paints, IndusInd Bank, ICICI Bank and Kotak Mahindra Bank lagged behind. In contrast, Tata Steel, State Bank of India, Dr Reddy’s, Bajaj Finance, TCS and Titan have emerged as profitable.

“The RBI’s GDP growth rate of 7.2 percent and the inflation rate of 6.7 percent for FY23 reflect a realistic monetary policy. High inflation estimates indicate that the central bank acknowledges the seriousness of inflation and the 50 bps repo rate hike is a message to refund inflation.” The governor’s remarks that the economy is resilient and is recovering are bullish from a market perspective, “said VK Vijayakumar, chief investment strategist at Geogit Financial Services.

The rise follows a 40 bps increase at an unscheduled meeting in early May that began the central bank’s tightening cycle.

To balance the dynamics of inflation-growth, Das said the RBI would focus on housing withdrawals as the liquidity of the system continues to be high. Housing withdrawals will be made in such a way that growth can get adequate support, he added.

The Monetary Policy Committee (MPC) has raised its inflation forecast for the current fiscal year (April 2022 to March 2023) from 5.7 per cent to 6.7 per cent in April but kept its economic growth forecast at 7.2 per cent.

Elsewhere in Asia, markets in Shanghai, Tokyo and Hong Kong ended higher, while Seoul settled lower. European markets were mostly low during the afternoon trade. U.S. stock markets ended with gains on Tuesday.

“In stark contrast to the results of the previous MPC meeting, this time the announced rate hike and subsequent steps have been fairly consistent with the consensus estimates. .

“MPCO has raised its CPI estimate for FY23 from 5.7 per cent to 6.7 per cent, which now seems to be a more realistic level. This contributes to increasing credibility and confidence in the RBI’s policy decisions,” said Yesha Shah, Head of Equity Research. , Samco Securities.

International oil benchmark Brent crude jumped 0.93 percent to USD 121.69 a barrel. Foreign institutional investors offloaded shares worth Rs 2,293.98 crore on Tuesday, according to the stock exchange.

Read more: RBI raises repo rate by 50 basis points to 4.90% to control inflation; EMI is going to increase 7

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