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Sensex ends 85 points lower at 37,522; RBI hikes repo rate by 25 bps

Among sectoral indices, the Nifty PSU Bank index ended 0.52% higher led by IDBI Bank and Punjab National Bank, while Nifty Auto index settled 0.76% lower due to fall in Exide and Motherson Sumi.

SI Reporter  |  New Delhi 

RBI, Reserve Bank of India

Nifty PSU Bank index ends 0.52% higher. Top gainers: COMPANY LATEST PREV CLOSE GAIN() GAIN(%) IDBI BANK 62.15 58.85 3.30 5.61 PUNJAB NATL.BANK 87.40 85.10 2.30 2.70 UNION BANK (I) 88.05 86.45 1.60 1.85 ORIENTAL BANK 81.95 80.70 1.25 1.55 BANK OF INDIA 95.35 94.40 0.95 1.01 Nifty sectoral gainers and losers of the day BSE Sensex: ICICI Bank, Vedanta, Maruti among top losers of the day, Coal India top gainer EXPERT'S VIEW ON RBI POLICY Jayant Manglik, President, Religare Broking The RBI hiked interest rates by 25bps along expected lines citing various risks to the inflation outlook, as it maintained the monetary policy stance at neutral. While acknowledging the recent cool-off in crude oil prices and the reduction in GST rates, which may have a disinflationary impact on inflation, the policy repo rate has been hiked in the backdrop of the uncertainty and volatility surrounding various inflation-impacting factors. These include global crude oil prices, global financial market volatility, input cost inflation, progress and distribution of monsoon, economy’s fiscal condition, the recently announced MSP hike and global trade protectionism, among others. However, by maintaining the monetary policy stance at neutral, we believe the RBI has retained some amount of flexibility as far as the rate decisions in the foreseeable future are concerned, which could be highly data dependent Market at close   The S&P BSE Sensex ended at 37,522, down 85 points while the broader Nifty50 index settled at 11,346, down 10 points. WATCH VIDEO What are policy rates and how do they impact you? Reserve Bank of India in its bi-monthly policy review takes decisions on key indicators of the economy. Know those key indicators and how do they impact you. CLICK HERE FOR MORE

Benchmark indices ended lower on Wednesday after the Reserve Bank of India (RBI) raised its by 25 bps to 6.5%. The policy comes amid rising inflation and a falling rupee. The widening current account deficit in an election year is also a key monitorable for the policymakers.

The S&P BSE Sensex ended at 37,522, down 85 points while the broader Nifty50 index settled at 11,346, down 10 points. In intra-day deals, the S&P BSE Sensex hit a fresh all-time high of 37,711.87 while the Nifty50 index touched its record high level of 11,390.55.

Among sectoral indices, the Nifty PSU Bank index ended 0.52% higher led by IDBI Bank and Punjab National Bank, while Nifty Auto index settled 0.76% lower due to fall in Exide and Motherson Sumi.

MONETARY POLICY REVIEW

The central bank's Monetary Policy Committee also increased the reverse by 25 bps to 6.25%, while keeping a neutral stance on policy. It pegged retail inflation at 4.8 per cent for the second half of the current fiscal. It also kept the GDP forecast for the current fiscal unchanged at 7.4 per cent and saw it at 7.5-7.6 per cent in the second half of the current fiscal.

This was the first time since October 2013 that the central bank hiked --- the rate at which the RBI lends to commercial banks --- at two consecutive policy meetings.

POLICY REACTION

The RBI policy decision does come as a surprise given that the overall inflation projections have not really changed significantly for the year being put at 4.6% in Q2 and 4.8% in H2, writes Madan Sabnavis, Chief Economist, CARE Ratings. The risks pointed out by the RBI still remains the same with the MSP, oil price, demand, HRA factors driving the decision to hike rates, he says. READ MORE HERE

GLOBAL MARKETS

Asian shares gave up ground on Wednesday, with weak data in the region and fears of an imminent escalation in the tariff war between the United States and China pulling lower even as strong earnings out of the US provided some support.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent, erasing earlier gains, while Japan's Nikkei stock index gained 0.8 per cent. The Shanghai Composite index fell 0.8 per cent, while the blue-chip CSI300 index lost 1 per cent.

(with wire inputs)

First Published: Wed, August 01 2018. 08:15 IST
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Sensex ends 85 points lower at 37,522; RBI hikes repo rate by 25 bps

Among sectoral indices, the Nifty PSU Bank index ended 0.52% higher led by IDBI Bank and Punjab National Bank, while Nifty Auto index settled 0.76% lower due to fall in Exide and Motherson Sumi.

Benchmark indices ended lower on Wednesday after the Reserve Bank of India (RBI) raised its by 25 bps to 6.5%. The policy comes amid rising inflation and a falling rupee. The widening current account deficit in an election year is also a key monitorable for the policymakers.

The S&P BSE Sensex ended at 37,522, down 85 points while the broader Nifty50 index settled at 11,346, down 10 points. In intra-day deals, the S&P BSE Sensex hit a fresh all-time high of 37,711.87 while the Nifty50 index touched its record high level of 11,390.55.

Among sectoral indices, the Nifty PSU Bank index ended 0.52% higher led by IDBI Bank and Punjab National Bank, while Nifty Auto index settled 0.76% lower due to fall in Exide and Motherson Sumi.

MONETARY POLICY REVIEW

The central bank's Monetary Policy Committee also increased the reverse by 25 bps to 6.25%, while keeping a neutral stance on policy. It pegged retail inflation at 4.8 per cent for the second half of the current fiscal. It also kept the GDP forecast for the current fiscal unchanged at 7.4 per cent and saw it at 7.5-7.6 per cent in the second half of the current fiscal.

This was the first time since October 2013 that the central bank hiked --- the rate at which the RBI lends to commercial banks --- at two consecutive policy meetings.

POLICY REACTION

The RBI policy decision does come as a surprise given that the overall inflation projections have not really changed significantly for the year being put at 4.6% in Q2 and 4.8% in H2, writes Madan Sabnavis, Chief Economist, CARE Ratings. The risks pointed out by the RBI still remains the same with the MSP, oil price, demand, HRA factors driving the decision to hike rates, he says. READ MORE HERE

GLOBAL MARKETS

Asian shares gave up ground on Wednesday, with weak data in the region and fears of an imminent escalation in the tariff war between the United States and China pulling lower even as strong earnings out of the US provided some support.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent, erasing earlier gains, while Japan's Nikkei stock index gained 0.8 per cent. The Shanghai Composite index fell 0.8 per cent, while the blue-chip CSI300 index lost 1 per cent.

(with wire inputs)

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