Stock market indices fall 2.3%; Inflation remains a key overhang, coupled with the impact of the Russian war and the Shanghai lockdown, analysts say
Stock market indices fall 2.3%; Inflation remains a key overhang, coupled with the impact of the Russian war and the Shanghai lockdown, analysts say
The Reserve Bank of India’s (RBI) sudden decision to raise interest rates on Wednesday, effective immediately, sparked a major sell-off in equities.
In response to the move, the major indices fell 2.29%. The last time the repo rate was increased was in August 2018. This time the market was unprepared for an off-cycle announcement.
The S&P BSE Sensex fell 1,306.96 points, or 2.29%, to 55,669. The biggest losers were Bajaj Finance, which fell 4.29%; Bajaj Finserv (-4.18), Titan (-4.11), IndusInd Bank (-3.98) and HDFC Bank (-3.34)
Similarly, the NSE Nifty 50 index fell 319.50 points, or 2.29%, to 16,677.60.
“The surprise RBI event in the second half [of the day] led to a sharp correction in the markets. Nifty not only broke its key supports but ended well in the red below 16,700,” said Ruchit Jain, Lead Research, 5paisa.com.
“Domestic stocks ended sharply lower on the sharp sell-off after the RBI announced a 40 basis point hike in repo rates in a surprise and unscheduled meeting,” said Mitul Shah, head of research at Reliance Securities.
“For stocks, inflation remains a key overhang, coupled with the multifaceted impact of Russia’s ongoing war with Europe and the tight lockdowns in Shanghai,” he said.
“In addition, the trend in the global stock markets and the development of the rupee and crude oil prices will dictate the market trend in the short term,” he added.
Despite the negative sentiment, Life Insurance of India’s (LIC) IPO, which opened on Wednesday, received encouraging reactions from policyholders and retail investors. On the first day, the IPO was drawn 0.65 times at 18:00.
