REPO Rate

REPO Rate

Indian markets ended in the red for seventh consecutive session after the Reserve Bank of India's move to hike repo rate and reverse repo rate by 50 basis points each hurt sentiments. Shares of rate sensitive sectors led the decline on concerns that rising interest rates would negatively impact sales.

"We think the RBI has acted decisively to stem inflationary risks, and will continue to do so. The larger than consensus increase in repo, increase in savings rate, and in the Marginal Standing Facility rate to repo +100 bps are all hawkish.

We think the RBI will continue on this path, and we reiterate our higher than consensus view of 75 bps of rate hikes going forward. We think the swap curve will sell off on the back of this policy announcement," said Tushar Poddar, Chief India Economist, Goldman Sachs.

The indices closed below 200 DSMA, the worst single day correction since February 2011.

National Stock Exchange's Nifty ended at 5565.25, down 136.05 points or 2.39 per cent. The broader index touched a high of 5710.80 and low of 5554.85 in today's trade.

Bombay Stock Exchange's Sensex closed at 18534.69, down 463.33 points or 2.44 per cent. The 30-share index hit a high of 19024.95 and low of 18502.42 intraday.

"The Nifty has closed below the 200 day simple moving average (DSMA) and the 200 day exponential moving average (DEMA) ie 5748 and 5633 respectively, which is a very bearish sign for the market in the short as well as the medium term," said Sharekhan report

BSE Midcap Index was down 1.86 per cent and BSE Smallcap Index moved 2.08 per cent lower.

All the sectoral indices closed in the red. BSE Auto Index fell 3.74 per cent, BSE Bankex declined 3.11 per cent and BSE Realty Index slipped 2.91 per cent.

"We believe quality liability franchise banks will be able to manage spread and margins better than wholesale funded entities in a rising interest rate environment. Hence, we are positive on superior franchise banks likeICICI Bank , BoB, PNB and SBI with medium term perspective. However, higher provisioning requirement, higher inflation, rising interest rates and further rate hike possibility will put pressure on banking stocks in near term," said KR Choksey report.

Jaiprakash Associates (-8.05%), Tata Motors (-5.30%), Bajaj Auto (-5.02%), M&M (-4.47%) and L&T (-4.17%) were the top Sensex losers.

Goldman Sachs has downgraded Jaiprakesh Associates to 'neutral' from 'buy' and removed the stock from the Wall Street bank's "Asia Pacific buy list."

BHEL (0.19%) was the only index gainer. 

REPO Rate