Nifty, Sensex down by nearly 1% as repo remains at 6.5%

MUMBAI: Equity benchmark indices, Sensex and Nifty, closed nearly one per cent lower on Thursday after the Reserve Bank of India (RBI) decided to keep the policy rate unchanged for the ninth consecutive time.

The RBI describing the food inflation as ‘stubborn’ has not be been viewed lightly by the market, it seems.

Sensex, Nifty down

The 30-share BSE Sensex fell by 581.79 points, or 0.73 percent, to settle at 78,886.22 in volatile trading.

Throughout the day, it dropped by as much as 669.07 points, or 0.84 per cent, to 78,798.94.

At th same time, the NSE Nifty declined by 180.50 points, or 0.74 per cent, to close at 24,117, having plunged by 217.8 points, or 0.89 per cent, earlier in the session to 24,079.70.

Analysts attributed the decline in domestic equities to continuous foreign fund outflows and weak trends in the US and European markets.

Repo impact

On Thursday, the RBI predictably maintained the benchmark interest rate and its stance for the ninth consecutive policy meeting, stating it cannot overlook persistently high food inflation, and must remain vigilant to prevent spillover effects.

The Monetary Policy Committee (MPC), comprising three RBI members and three external members, kept the benchmark repurchase or repo rate unchanged at 6.50 per cent, reaffirming its unambiguous focus on inflation.

Eye on Federal Reserve?

The RBI Governor Shaktikanta Das noted that food inflation remains “stubbornly” high. The RBI MPC seems to be awaiting signals from the US Federal Reserve before taking further action.

“In the meantime, stock markets are likely to continue consolidating,” said Umeshkumar Mehta, CIO of SAMCO Mutual Fund.

Losers & gainers

Among the 30 Sensex firms, Asian Paints, Infosys, JSW Steel, UltraTech Cement, Power Grid, Larsen & Toubro, HCL Technologies, and Tata Steel were the biggest losers.

On the other hand, Tata Motors, HDFC Bank, Bharti Airtel, ITC, IndusInd Bank, and Axis Bank were the gainers.

“Today’s MPC decision to keep the repo rate unchanged at 6.5 percent was expected, as the committee reiterated its focus on containing inflation without compromising growth,” said VP Nandakumar, MD & CEO of Manappuram Finance.