Sensex tanks 1,307pts on RBI's sudden 40bps rate hike; Nifty breaks 16,700

Meanwhile, the mega LIC IPO was off to a steady start, with policyholder and employee segment receiving strong response on Day 1 of the offer period.

4:23 PM

LIC IPO: 61% of issue booked so far

Policyholders: 1.79 times
Employee: 98 per cent
Retail investors: 54 per cent
NIIs: 25 per cent
QIBs: 33 per cent

4:17 PM

Technical view: Kunal Shah - Senior Technical & Derivative Analyst at LKP Securities

The Bank Nifty index witnessed sharp selling pressure on the back of the RBI governor's announcement of a rate hike. The index formed a bearish engulfing candle on the daily chart and remains in a sell mode as long as it stays below the level of 36200. The index is likely to test the lower end levels of 35000-34800 and a sustainable move below this will accelerate the selling pressure.

4:15 PM

Market view: Vinod Nair, Head Of Research at Geojit Financial Services

Although the rate hike was anticipated, the sudden announcement of a 40bps increase in repo rate along with a 50bps increase in CRR in response to the rising inflation spooked markets leading to a heavy selloff. Global markets are also trading cautiously ahead of the upcoming Fed meeting, as an increase of more than 50 bps will extend the current consolidation phase.

4:10 PM

European markets edge lower in trade

4:05 PM

US equity futures trade on a positive note ahead of FOMC outcome

4:02 PM

ANALYST VIEW: Shivam Bajaj, Founder & CEO at Avener Capital

The hike in the repo rate has been announced to mitigate the results of spiking inflation rates in the economy. As the RBI announces withdrawal of its accommodative stance, this move might hint at the RBIs willingness to further tighten the liquidity in the forthcoming time. The long term impact of this rate hike across markets shall be an interesting sight.

3:59 PM

Closing bell: Over 2,500 stocks declined whereas 826 advanced

3:53 PM

Closing bell: Apollo Hospitals, Adani Ports, Hindalco top Nifty 50 losers

3:49 PM

Closing bell: ONGC, Britannia, Power Grid top Nifty 50 gainers

3:43 PM

Closing bell: Nifty Media worst sectoral performer

3:41 PM

Closing bell: Broader markets tepid; India Vix spikes above 7%

3:39 PM

Closing bell: All sectors drown in red

3:37 PM

Closing bell: 3 out of 30 Sensex stocks close in negative territory

3:35 PM

Closing bell: Sensex bleeds over 1,300 points

3:34 PM

Closing bell: Nifty 50 sinks below 16,700 levels

3:26 PM

EXPERT VIEW: Mr. Ramani Sastri - Chairman & MD, Sterling Developers

The increase in repo rate will likely have an impact on the industry as residential demand has been positively revived in the post pandemic context and needs to be fostered. It also goes without saying that the real estate industry's perennial hope is fixed on lower interest rates as it improves affordability and also provides the required fuel for the growth of the economy along with the real estate sector, which is allied with several other industries. We remain positive and hope that the government continues to provide the required support that the industry requires.

3:18 PM

Quantum, timing of RBI rate hike has surprised the markets: Analysts

In the last policy meeting in April, the monetary policy committee (MPC) of the RBI had shifted its focus to tackle the rising inflation in India after the Russian invasion of Ukraine. READ MORE HERE

3:18 PM

EXPERT VIEW: Today's hike makes the effective repo rate higher by 80 bps

The surprise mid-cycle rate hike by the RBI is driven by factors such as inflation concern (Mar’22 inflation nearly 100 bps higher than expected and another surprise high inflation rate now expected in Apr’22), the perception that the RBI is falling behind the curve, external sector pressures (capital outflow, higher trade deficit, weaker rupee) and likelihood of 50 bps rate hike by the Fed.

By setting the interest rate on newly introduced SDF rate at 40bps higher than the reverse-repo rate, the RBI effectively increased the policy rate by 40 bps in the April’22 policy.

Today’s rate hike makes the effective rate higher by 80 bps. The simultaneous 50 bps CRR hike would tighten liquidity (By Rs.90,000 crore immediately), which would improve the transmission of rate hike in credit and debt market.

We expect immediate increase in money market rate, some transmission in the long-term bond market and also credit market (both lending and deposit rates). The impact on the equity market is likely to be negative in the short-term.

Views by Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers

3:08 PM

Rate hike impact: Rate sensitive shares tumble as RBI's ups rate by 40bps

At 02:27 PM: Nifty Bank, Nifty Financial Services, Nifty PSU Bank, Nifty Auto and Nifty Auto index were down between 1.3 per cent and 2 per cent on the NSE. Read here

3:01 PM

MARKET REACTION :: The cost of funds is likely to increase

RBI has raised the repo rate by 40bps with immediate effect and CRR by 50bps by 21st May 2022. The rate hike was much-anticipated factoring rise in food and general inflation. The rate hike is likely to shrink liquidity in the economy overall. As far as banks are concerned, the cost of funds is likely to increase so does the cost of deposits. It may translate into NIMs pressure. However, a quick increase in MCLR May control the NIMs squeeze

Views by:  Ajit Kabi, Banking Analyst at LKP Securities.

2:56 PM

MARKET REACTION :: Rate hike is a surprise since it came on the LIC IPO opening date

MPC's proactive move is justified from the perspective of inflation management, but the timing leaves a lot to be desired. The above 1,000 point crash in Sensex has soured the sentiments on the opening day of India's largest IPO. The 10-year bond yield has spiked to above 7.39% indicating an imminent rise in the cost of funds. 

Views by: Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2:53 PM

RBI POLICY IMPACT :: PSU Banks crash; index falls 3%

2:52 PM

RBI POLICY IMPACT :: MidCap index sinks 3%

2:48 PM

HEATMAP :: 27 OF 30 SENSEX CONSTITUENTS SINK

2:47 PM

MARKET CHECK :: BENCHMARKS FALL OVER 2%

>> Sensex at 55,655.02, down 1,320.97 points or 2.32%

>>Nifty at 16,669, down 400 points or 2.3%

 

2:44 PM

INDIA VIX JUMPS 8%

2:39 PM

RBI POLICY IMPACT :: Nifty50 tests 17,800

2:36 PM

BOND MARKET UPDATE :: 10-year yields soar 4%

2:34 PM

RBI POLICY IMPACT :: Nifty Bank falls 1.5%

2:27 PM

NEWS ALERT :: RBI remains steadfast to control inflation, ensure growth, says Guv

>> Sustainable growth will be achieved via price stability

>> Remain watchful on incoming data

>> Despite challenges, Indian economy's fundamentals remain strong

>> IMF has lauded our efforts