Mumbai, Oct 7 (PTI) Stock markets closed lower on Wednesday, with the benchmark Sensex down 429 points after two straight days of gains, as the RBI raised the key policy rate for the first time in nearly four years.
Snapping the two-day rally, the 30-share BSE Sensex fell 429.11 points, or 0.59 per cent, to settle at 72,638.70 with 26 of its constituents closing lower and four higher. During the day, Sensex lost 599.09 points, or 0.81 per cent, to hit a low of 72,468.72.
The 50-share NSE Nifty declined 173.05 points, or 0.76 per cent, to end at 22,603.05.
Rising crude oil prices and persistent foreign fund outflows also hit market sentiment, analysts said.
Among the 30 Sensex firms, Titan, Bharat Electronics, Asian Paints, Infosys, Larsen & Toubro and Adani Ports were the major laggards.
Kotak Mahindra Bank, Bharti Airtel, ICICI Bank and Bajaj Finance were the gainers.
Brent crude, the global oil benchmark, jumped 1.41 per cent to USD 102 per barrel.
The Reserve Bank of India raised its benchmark interest rate by 25 basis points to 5.50 per cent on Wednesday, its first increase in nearly four years, and signalled that further hikes could follow as rising inflation and a weakening currency prompt a policy pivot.
The six-member Monetary Policy Committee voted unanimously to raise the repo rate, the first such increase since Governor Sanjay Malhotra took office in December 2024.
While the move was widely expected, the central bank sprang a surprise in shifting its stance towards “calibrated tightening”, effectively ruling out a rate cut in the near term.
“Rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook,” Malhotra said, announcing the MPC decisions.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,961.30 crore on Tuesday, according to exchange data.
“With the RBI delivering the rate hike on expected lines, the domestic market reacted more sharply to the shift in policy stance from neutral to calibrated tightening, which signals a turn in the rate cycle.
“While the upward revision to growth projections reaffirmed the strength of domestic fundamentals, the higher inflation outlook and the RBI’s emphasis on price stability tempered sentiment,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
Broader markets closed mixed as the BSE MidCap Select index dipped 0.43 per cent, while SmallCap Select index ended marginally up by 0.17 per cent.
Among the BSE sectoral indices, metal tanked 2.46 per cent, Consumer Durables 1.83 per cent, Realty 1.74 per cent, Commodities 1.60 per cent, Auto 1.41 per cent, Services 1.10 per cent, IT 1.15 per cent and Focused IT 1.01 per cent.
Telecommunication, PSU Bank, Hospitals and Housing Finance were the winners.
In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 index and Hang Seng index ended lower.
“Markets reversed the recent gains on Wednesday and ended lower amid volatility, weighed down by a combination of domestic and global factors. The overall market tone remained neutral following the RBI’s widely anticipated 25 bps repo rate hike to 5.5 per cent, with the stronger growth outlook initially supporting rate-sensitive sectors like banking. However, sentiment softened as investors weighed the higher inflation outlook and shift to a calibrated tightening stance, keeping the broader market mood cautious.
“Global macro concerns added to the pressure, with Brent crude rebounding above USD 101 a barrel, while continued foreign outflows, elevated global bond yields and rupee weakness remained key overhangs for domestic equities,” Ajit Mishra, SVP – research, Religare Broking, said.
Markets in Europe were trading lower. US markets ended higher on Tuesday.
On Tuesday, the Sensex jumped 685.34 points, or 0.95 per cent, to settle at 73,067.81. The Nifty climbed 220.35 points, or 0.98 per cent, to end at 22,776.10. PTI SUM MR
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