By Bharath Rajeswaran
BENGALURU (Reuters) -Indian shares declined on Thursday, dragged by rate-sensitive sectors, following the Reserve Bank of India’s (RBI) decision to keep its key interest rate unchanged for a sixth consecutive meeting, in line with expectations.
The NSE Nifty 50 index fell 0.75% to 21,767.15, while the S&P BSE Sensex dropped 0.78% to 71,588.64, as of 11:40 a.m IST.
Both the indexes were up about 0.2% each ahead of the RBI rate decision, but they swung to losses of about 0.2% shortly after the decision, with the decline extending later.
The broader and more domestically focussed small- and mid-caps traded flat.
The RBI’s Monetary Policy Committee left the key repo rate unchanged as inflation remained above the central bank’s 4% medium-term target.
The monetary policy must continue to be actively disinflationary, RBI Governor Shaktikanta Das said in the policy statement.
“It (RBI policy decision) was disappointing for markets as RBI clearly said that it will not bring down rates until consumer price inflation fell below its target of 4%,” said Samrat Dasgupta, chief executive at Esquire Capital Investment Advisors.
Expectations for cues from the governor on the timing of rate easing have been dashed, as the central bank projects elevated inflation at 4.5% for fiscal 2025, Dasgupta added.
Eight of the 13 major sectors logged losses. Sectors such as financials, banks, consumer, auto and realty fell between 0.7% and 1.5%.
Public sector banks, however, bucked the trend and extended their rally, adding about 2% following a 3% increase on Wednesday.
Analysts have indicated that the sector’s reasonable valuations and stable earnings outlook have made it an attractive option in an otherwise expensive market.
The PSU bank index surged about 20% in 2024, compared with a 1.2% increase in the Nifty 50, driven by strong earnings from key constituents such as Bank of Baroda and Punjab National Bank.
Among individual stocks, Power Grid Corp of India rose 5%. The state-run energy transmission company, which is the top percentage gainer on the Nifty 50, posted a rise in third-quarter profit, buoyed by robust power demand.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Dhanya Ann Thoppil, Varun H K, Sonia Cheema and Sohini Goswami)
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