Banking stocks were among the top gainers in early trade after Reserve Bank of India announced a 50 bps hike in repo rate today. BSE bankex was trading 81 points higher at 40457 and Bank Nifty gained 36 points to 35,066. Shares of other rate sensitive sectors such as auto were trading flat after rate hike announcement. The BSE auto index rose 5 points to 25,932.
Sensex declined 354 points to 54,753 and Nifty fell 84 points to 16,332 after Das announced a 50 bps hike in repo rate to 4.9 per cent.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "Up to 50 bps rate hike by the RBI is already discounted by the market and, therefore , the central bank's guidance on inflation and rates will be more important. Inflation for FY23 is likely to be around 6.8% forcing the RBI to sound hawkish."
Ahead of the RBI policy decision announcement, BSE bankex gained 135 points to 40,511 and Bank Nifty was trading 87 points higher at 35,082. Shares of other rate sensitive sectors such as auto were trading lower in early trade. The BSE auto index fell 66 points to 25,861.
Last month, MPC raised the key policy rate (repo) by 40 basis points to 4.4 per cent to tame the rising inflation. It was the first rate hike after August 2018.
Share Market Live: Sensex, Nifty trading flat ahead of RBI policy meet outcome
With an aim to cushion the impact of lockdown, RBI had slashed the repo rate by 75 basis points to 4.40 per cent in March 27, 2020 from 5.15 per cent.
On May 22, 2020, RBI again cut the repo rate by 40 basis points and brought it down to 4 per cent. Thereafter, it maintained status-quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022.