Nifty slips below 16,850 after RBI hikes repo rate by 40 bps

The domestic equity barometers tumbled in mid-afternoon trade, following a surprise rate hike decision announced by the Reserve Bank of India (RBI). The Nifty traded below the 16,850 mark.

At 14:25 IST, the barometer index, S&P BSE Sensex was down 825.21 points or 1.45% to 56,150.78. The Nifty 50 index lost 250.70 points or 1.47% to 16,818.40.

In the broader market, the S&P BSE Mid-Cap index fell 1.62% while the S&P BSE Small-Cap index declined 1%.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 979 shares rose while 2,341 shares fell. A total of 111 shares were unchanged.

RBI MPC Meet Outcome:

The Reserve Bank of India (RBI)'s Monetary Policy Committee (MPC) held an off-cycle meeting between 2nd and 4th May 2022.

MPC unanimously voted to increase the policy repo rate by 40 bps to 4.40%.

MPC judged that the inflation outlook warrants an appropriate stance. In MPC's view, monetary policy response at this juncture would help preserve macro-financial stability amidst increasing volatility in financial markets, RBI Governor Shaktikanta Das said.

Following the RBI's rate hike announcement, the yield on the 10-year benchmark federal paper jumped to 7.360% from its previous close of 7.119%.

The Nifty Bank index was down 0.91% at 35,836.

Among the components of the Nifty Bank index, HDFC Bank (down 2.75%), Bandhan Bank (down 2.64%), Axis Bank (down 2.14%), IndusInd Bank (down 1.52%) and Bank of Baroda (down 1.42%), State Bank of India (down 1.19%), ICICI Bank (down 1.14%), Punjab National Bank (down 1%) and AU Small Finance Bank Ltd (down 0.95%) declined.

Numbers to Watch:

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 76.3150, compared with its close of 76.4800 during the previous trading session.

MCX Gold futures for 3 June 2022 settlement slipped 0.28% to Rs 50,675.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was down 0.06% to 103.40.

In the commodities market, Brent crude for June 2022 settlement advanced $3.58 or 3.41% at $108.55 a barrel.

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