- Indian benchmark indices ended lower after RBI's repo rate hike and policy shift
- Sensex fell 0.59% to 72,638.70, Nifty 50 dropped 0.76% to 22,603.05
- RBI raised repo rate by 25 bps to 5.5%, first hike in over three years
Domestic equity benchmarks Sensex and Nifty 50 snapped their two-day winning streak on Wednesday after the Reserve Bank of India (RBI) hiked the repo rate and changed its monetary policy stance, as was widely expected by the Street. The 30-share BSE Sensex settled 0.59%, or 429.11 points, lower at 72,638.70 levels, while the NSE Nifty 50 benchmark settled 173.05 points, or 0.76%, lower at 22,603.05 levels. Broader markets ended mixed.
Nifty Smallcap 100 ended 0.30% higher, while Nifty Midcap 100 index closed 0.63% lower.Titan, Asian Paints and BEL were top drags on 30-share BSE Sensex index. On the flipside, Kotak Mahindra Bank, Bharti Airtel and ICICI Bank were top gainers during the session. The rupee weakened to a five-month low against the dollar and bond yields rose after the policy announcement. Brent crude rose 1.3% to $102 a barrel on lingering risks to US output and Houthi attacks on Saudi Arabia.
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Halting its nearly two-year policy of monetary accommodation, the RBI signalled a hawkish turn as it raised the benchmark lending rate by 25 basis points. The decision, backed unanimously by all members of the Monetary Policy Committee (MPC), led to the first rate hike in over three-and-a-half years. The repo rate has increased to 5.5%, while the Standing Deposit Facility (SDF) rose to 5.25%. The Marginal Standing Facility (MSF) rate and the Bank Rate were revised to 5.75%. MPC decisively changed its policy stance to "calibrated tightening", with four of the six MPC members backing the shift.
Nifty 50 Outlook
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities said Nifty traded within a range of nearly 169 points throughout the session, marking the narrowest trading range in the last six sessions. On the daily chart, the index formed a small-bodied candle with a lower wick, indicating minor buying traction at lower levels. Despite the intraday weakness, the index has recovered nearly 400 points from its recent low over the past four sessions.
The recent recovery in the index indicates a pullback following a series of sharp declines. From a technical perspective, Nifty continues to trade below its 20-day and 50-day EMAs. According to the analyst, the daily RSI has recovered from oversold levels, indicating the possibility of a short-term pullback. However, the broader structure remains bearish until decisive and sustained buying interest emerges.
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''Going forward, the 22,460–22,440 zone could act as immediate support. A decisive break below this zone could revive selling pressure and trigger further correction towards 22,300. On the upside, 22,730–22,750 could act as an immediate hurdle. A sustained move above this zone could extend the pullback rally towards 22,900. Despite the recent recovery, the broader structure remains cautious,'' said Shah of SBI Securities.
Bank Nifty Outlook
Bank Nifty traded within a range of nearly 734 points and closed marginally lower by 0.13%. The index formed a small-bodied candle with wicks on both sides, indicating indecision at current levels. A decisive breakout on either side is likely to determine the next directional move. The broader structure remains bearish, with Bank Nifty continuing to trade below key EMAs. During the session, the index traded higher after the RBI MPC verdict.
However, RSI has bounced from lower levels and moved above 40, indicating a temporary halt in selling pressure. Going forward, 54,600–54,500 could act as support; a break below this zone could trigger fresh selling towards 54,000. On the upside, 55,600–55,700, coinciding with the 21-day EMA, could act as a hurdle; a sustained move above this zone could extend the pullback towards 56,100, according to SBI Securities.
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