A woman walks past the trading board at a stock exchange. (Photographer: Luis Enrique Ascui/Bloomberg News)

Sensex, Nifty Post Worst Two-Day Fall Since Demonetisation

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Closing Bell: Sensex, Nifty Plunge After RBI Holds Rates

Indian equity benchmarks slumped for third day and rupee fell to record low of 74 per dollar after the Reserve Bank of India kept rates unchanged.

The S&P BSE Sensex slumped 2.25 percent or 792 points to 34,376 and the NSE Nifty 50 Index dropped 2.7 percent or 283 points to 10,316.

The Reserve Bank of India surprised markets by keeping interest rates unchanged, as it awaits for greater clarity on the evolving growth-inflation scenario in the economy. The Reserve Bank of India maintained the main repurchase rate at 6.5 percent, an outcome forecast by only nine of 49 economists surveyed by Bloomberg.

It was the authority’s move to change its policy stance to calibrated tightening that pushed the benchmark equity index further into the red after briefly paring losses soon after the policy decision.

Sixteen of 19 sector gauges compiled by BSE ended lower dragged the S&P BSE Oil & Gas Index's 12.68 percent drop, its worst intraday drop in 10 years. Rate sensitive banking, realty and auto indices also fell 2-3.2 percent after the Reserve Bank of India kept the repo rate unchanged.

Market Check: Sensex Slumps 900 Points; Nifty Breaks 10,300

Indian equity benchmarks slumped after the Reserve Bank of India held rates unchanged and changed its stance to ‘calibrated tightening’ from ‘neutral’.

The Sensex plunged 2.5 percent or 880 points to 34,297 and the Nifty 50 Index declined 2.8 percent or 322 points to 10,277.

Change in stance to ‘calibrated tightening’ indicates there are two options either the RBI increase rates or maintain status quo but with ‘neutral’ stance there was a chance of a cut as well, Reserve Bank of India Governor Urjit Patel while addressing media after the policy meeting.

Sensex, Nifty Post Worst Two-Day Fall Since Demonetisation
Sensex, Nifty Post Worst Two-Day Fall Since Demonetisation

RBI Is Prioritising Systemic Liquidity Over Protecting Rupee: Saurabh Mukherjea

RBI is more focused on protecting the financial system and making sure that the NBFCs have enough liquidity than obsessing about inflation, Saurabh Mukherjea founder of Marcellus Investment Managers told BloombergQuint.

Accommodation By Systemic Central Banks Is Finally Tapering Off, Says Urjit Patel

It is important to recognise that close to a decade-long extraordinary accommodation by systemic central banks is finally tapering off. This inevitable normalisation coupled with the risks stated above has resulted in several quantity and price adjustments in global financial markets.Global trade, according to latest WTO data, is losing pace possibly on account of ongoing tariff wars. In emerging markets, currency depreciation imposed additional upside inflation risk besides the contagion risks of a technical nature from specific EM episodes and geopolitical developments.
RBI Governor, Urjit Patel

Rupee Hits Record Low Of 74/$, After RBI Keeps Rates Unchanged

The Indian rupee weakened past the 74 per dollar mark after Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50 percent.

Yesterday rupee touched record low of 73.81 per dollar, ended down 24 paise versus Wednesday's close 73.34 per dollar.

Rupee continues to remain under pressure and sell-off in equity markets, strength in the dollar and surge in global crude oil prices contribute to weakness in the currency.

MPC says its decision is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for CPI inflation of 4 percent.

Bloomberg Quint

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