RBI repo rate hike and “calibrated tightening” send Sensex and Nifty lower

The Nifty 50 closed at 22,603.05, down 173 points or 0.76%, while the BSE Sensex settled at 72,638.70, a loss of 429 points or 0.59%

Mumbai: Indian equity benchmarks ended sharply lower on Wednesday, snapping a two-session winning streak as the Reserve Bank of India’s rate hike and shift towards tighter monetary policy weighed on investor sentiment.The Sensex dropped 429.11 points, or 0.59 percent, to settle at 72,638.70. The Nifty declined 173.05 points, or 0.76 percent, to close at 22,603.05.RBI Move Spooks InvestorsThe RBI raised the repo rate by 25 basis points to 5.5 percent and shifted its monetary policy stance to “calibrated tightening”, signalling a tougher approach towards inflation.The decision raised concerns over borrowing costs, liquidity conditions and the possible impact of higher interest rates on economic growth and corporate earnings.Among Nifty stocks, Titan Company, BEL and Hindalco Industries were major laggards. Metal counters witnessed particularly strong selling pressure.Nifty Tests Key SupportMarket experts said the Nifty slipped below 22,700 and finished close to the crucial 22,600 support level.A sustained break below 22,600 could open the door for a further decline towards 22,400. On the upside, 22,800 is now seen as the first major hurdle for any recovery. Sensex Gains 473 Points, Nifty Reclaims 22,500 As FMCG And Banks Lead RecoveryBroader markets displayed a mixed trend. The Nifty MidCap 100 declined 0.63 percent, while the Nifty SmallCap 100 bucked the weakness and gained 0.30 percent.Metal Stocks Drag, PSU Banks ShineSectorally, Nifty Metal emerged as the worst performer as investors reduced exposure to metal companies. In contrast, the Nifty PSU Bank index ended higher and provided some support to the broader market.Investors will now shift their attention to the September-quarter earnings season for fresh market direction.Analysts said management commentary will be closely tracked to assess whether companies can manage rising input costs, retain pricing power and sustain consumer demand during the second half of the financial year.The market will also closely monitor how the RBI’s tighter policy affects liquidity, economic growth and corporate profitability in the coming months.

New Delhi [India], October 7 (ANI): Indian equity markets closed lower on Wednesday as investors turned cautious following the Reserve Bank of India's shift towards calibrated tightening, amid concerns over inflation, while the rupee weakened to a five-month low.The NIFTY 50 index closed at 22,603.05, declining 173.05 points or 0.76 per cent, while the BSE Sensex closed at 72,638.70, down 429.11 points or 0.59 p

Nifty closed 0.76% lower at 22,603.05, while BSE Sensex closed 0.59% lower at 72,638.70.

The Reserve Bank of India (RBI) on Wednesday approved measures to allow Sebi-registered depositories to include bank deposit details in their consolidated account statements (CAS)."We are also facilitating SEBI-regulated depositories to include information related to deposit accounts in their consolidated account statement (CAS)," RBI Governor Sanjay Malhotra said while announcing the bi-monthly monetary policy decision.The RBI said the measure will be operational by December 31, 2026, allowing Demat account holders to view information on their bank deposits alongside securities, equity and debt holdings in a single consolidated statement, making it easier to manage their finances.The move will allow customers to access and share their financial information across different financial service providers through any NBFC-Account Aggregator (NBFC-AA), instead of being restricted to a particular account aggregator.Customers who do not have demat accounts will also continue to be able to obtain a consolidated view of their financial information and share it through NBFC-AAs.Additionally, the RBI will constitute a Technical Consultative Committee for Financial Markets against the backdrop of rapidly evolving financial markets and infrastructure. The committee will provide a forum for structured engagement with market participants and other stakeholders on policy and operational matters relating to money, government securities and foreign exchange markets, as well as their respective derivatives markets and infrastructure.“The Committee will serve as a forum for structured engagement with market participants and other stakeholders on policy and operational matters related to financial markets,” Malhotra said.The composition of the committee and its terms of reference will be notified separately.Also read | RBI hikes repo rate by 25 bps: How are rate sensitive stocks, sectors faring after first increase in nearly 4 years?RBI MPC meet outcomeRBI Governor Malhotra announced that the Indian central bank’s Monetary Policy Committee (MPC) after a detailed assessment of the evolving macroeconomic and financial conditions, developments, and the outlook, voted unanimously to increase the policy repo rate by 25 basis points to 5.5%. STF rate stands adjusted at 5.25%, and the marginal standing facility rate and the bank rate to 5.75%."The MPC noted that the global context, on account of geopolitical developments, remains challenging. Nonetheless, the Indian economy has been strong, and the economic momentum remains broad based.Moreover, the economy is expected to remain resilient,” Malhotra said.What lies ahead for Indian stock market?With crude prices remaining firm and inflationary pressures continuing to linger, the RBI’s decision to hike repo rates was largely anticipated, said Dnyanada Vaidya, Research Analyst - BFSI, Axis Direct. “We expect another 25 bps rate hike to follow in the next MPC meeting. The regulator increased its growth forecast by 40 bps to 7.1% for FY27, while continuing inflationary pressures prompted the RBI to increase the inflation forecast to 5.2% vs 5% earlier,” he noted.The RBI’s 25 bps repo rate hike to 5.50%, coupled with the shift to a calibrated tightening stance, signals a meaningful change in the policy cycle, said Ajit Mishra, SVP, Research - Religare Broking. While the hike itself was largely expected, the change in stance is the more important takeaway, indicating that inflation risks are now taking greater precedence, he noted.“We expect the near-term market impact to remain selective, with rate-sensitive pockets facing pressure, while banks with stronger balance sheets and liability franchises should remain relatively better placed,” he added.Also read | Sensex falls over 200 points, Nifty below 22,700 as RBI hikes rate by 25 bps. What lies ahead?Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.

Bank stocks gained up to 2% on Wednesday after RBI Governor Sanjay Malhotra announced the MPC’s decision to hike interest rates for the first time in four years, helping the Nifty Bank index gain even as the broader market slipped into the red.The Nifty Bank index gained more than 147 points to 55,276 on Wednesday morning after the MPC meeting outcome.The Nifty 50, meanwhile, remained in the red, falling around 100 points to trade below 22,680, as of around 10:30 am.Kotak Mahindra Bank shares rose 2%, while Union Bank, Canara Bank, Punjab National Bank (PNB), Axis Bank and SBI shares gained around 1% each.Federal Bank, Bank of Baroda and ICICI Bank shares were trading in the green with marginal gains. Nifty Financial Services also moved into the green, with PFC, Bajaj Finance and others gaining up to 2%.Also read | Can banks raise FD interest rates now as RBI increases repo rate by 25 bps?What RBI Governor Sanjay Malhotra saidRBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC), after a detailed assessment of evolving macroeconomic and financial conditions, developments and the outlook, unanimously voted to increase the policy repo rate by 25 basis points to 5.50%. The standing deposit facility (SDF) rate now stands at 5.25%, while the marginal standing facility (MSF) rate and bank rate have been adjusted to 5.75%."The MPC noted that the global context, on account of geopolitical developments, remains challenging. Nonetheless, the Indian economy has been strong, and the economic momentum remains broad based.Moreover, the economy is expected to remain resilient,” Malhotra said.Despite fears, RBI increased its GDP projections, while striking a cautious note on inflationary pressures. Malhotra however dismissed hopes for near-term rate cuts as RBI changed its stance to ‘calibrated tightening’.Why are bank stocks rising?The 25 basis point rate hike was already priced in by the market, according to analysts. "Banks will benefit from the rate hike since rising floating rates will improve their margins," according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments.All eyes will now be on Q2 earnings for the banking space with focus remaining on margins which appears to be the only pain point at the moment, while growth holds firm and asset quality continues to remain resilient, said Dnyanada Vaidya, Research Analyst - BFSI, Axis Direct. Similar trends are visible in the provisional numbers reported by banks. Credit growth has remained strong and is expected to be broad-based. Deposit growth which was hovering between 11-12% over the last few quarters has picked-up meaningfully supported by strong FCNR(B) inflows.However, near-term margins will continue to see pressure due to excess liquidity and lower-spread lending, the analyst from Axis Direct noted. “Outlook for NIMs turns constructive for H2, with rate hikes reflecting in EBLR-linked portfolios of banks. We believe private banks, especially larger private banks would be bigger beneficiaries. Asset Quality remains in a sweet spot, with no challenges visible from the prolonged West Asia conflict,” he added.The next few months will be particularly important because the direction of crude prices, inflation and the rupee will determine whether today’s move is a one-off adjustment or the beginning of a broader normalisation of monetary policy, said Vijay Kuppa, CEO, InCred Money.Also read | LIVE updates on RBI MPC meet outcomeDisclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.

Benchmark indices Sensex and Nifty recovered significantly from their intraday lows on Wednesday as value buying emerged following eight consecutive weeks of market declines.At 11 am, the Sensex was down 76.47 points, or 0.1%, at 72,991.34, while the Nifty declined 71.10 points, or 0.31%, to 22,705.The broader market remained evenly balanced, with 1,798 stocks advancing, 1,809 declining and 172 remaining unchanged.The Sensex recovered around 450 points from the day's low, while the Nifty moved back above the 22,700 level as investors bought stocks at lower valuations.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' Bank Nifty turns positive after RBI policyBank Nifty moved into positive territory following the Reserve Bank of India's (RBI) monetary policy announcement.The Monetary Policy Committee raised the benchmark repo rate by 25 basis points to 5.5% from 5.25%, marking the central bank's first rate increase since February 2023.The RBI also shifted its monetary policy stance from neutral to calibrated tightening, signalling the possibility of further rate increases.However, RBI Governor Sanjay Malhotra said the timing and extent of future policy action would depend on actual inflation and economic growth outcomes.Kotak Mahindra Bank, ICICI Bank and Axis Bank were among the leading gainers on the Nifty. Rate hike was factored in: AnalystsAnalysts said the 25-basis-point repo rate increase had largely been factored into market expectations ahead of the RBI announcement, limiting the immediate negative impact on equities.Value buying at lower levels also helped the benchmark indices recover after a prolonged period of weakness.The market had declined for eight consecutive weeks, creating opportunities for investors to accumulate stocks at lower levels.While the benchmark indices remained in negative territory late in the morning session, their recovery from the day's lows indicated improved buying interest.Banking stocks provided additional support following the RBI policy announcement, helping the broader market stabilise despite the increase in the benchmark interest rate.