Indian equity benchmarks on Wednesday plunged sharply after the Reserve Bank of India (RBI) decided to raise the repo rate by 40 basis points to 4.40 per cent. In the closing session, the 30-share BSE benchmark tumbled over 1,300 points and closed at 55,669. The NSE Nifty was trading below 16,800 points, after tanking nearly 400 points.
On Wednesday, the RBI increased the benchmark lending rate by 40 basis points to 4.40 per cent in a bid to contain inflation, which has remained stubbornly above the target zone of 6 per cent for the last three months.
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The surprise announcement central bank governor Shaktikanta Das followed an unscheduled meeting of the Monetary Policy Committee (MPC), with all six members unanimously voting for a rate hike while maintaining the accommodative stance.
After the sharp fall, the major losers included in the Sensex pack included Bajaj Finserv, Bajaj Finance, Titan, HUL, RIL, Asian Paints and HDFC Bank. While PowerGrid, Kotak Mahindra Bank, NTPC, Infosys and Wipro managed to remain among the gainers.
Interstingly, the announcement also coincided with the opening date of the state-run insurance company LIC’s initial public offering (IPO). “MPC’s proactive move is justified from the perspective of inflation management, but the timing leaves a lot to be desired,” news agency PTI qouted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, as saying.
Meanwhile, the US Federal Reserve is also expected to raise rates by 50 bps, in a similar to move to battle inflation.
(With agency inputs)