The stock markets ended in the red again on a day after Reserve Bank of India (RBI) hiked its key lending rate. Continuous foreign fund outflows and surging crude oil prices also weighed on markets. Bank Nifty settled at 34946.15 level, down by 0.14 percent. NSE Midcap and Small cap ended on the lower side losing half percent each. Sectorally , Nifty Realty and Media have contributed 1.49 and 1.49 percent on a positive side. On the flip side Nifty FMCG, Oil and Gas ended with losses of a percent each.
The benchmark Sensex declined 215 points to close lower at 54,892.49. The broader Nifty closed below 16,400 mark at 16,356.25.
In Nifty stocks, State Bank of India, Tata Steel and Dr Reddy were the top gainers while Bharti Airtel, ITC and Reliance were the prime laggards. India VIX ended at 19.85 has cooled off marginally and closed below 20 levels suggesting slowdown in volatility. India VIX plunged 2.89 percent intraday and settled at 19.84.
From the Sensex pack, Bharti Airtel, ITC, Reliance Industries, Asian Paints, IndusInd Bank, ICICI Bank and Kotak Mahindra Bank were the major laggards.
In contrast, Tata Steel, State Bank of India, Dr Reddy's, Bajaj Finance, TCS and Titan emerged as the gainers.
RBI hikes repo rates; home, auto loan EMIs to go up
The central bank raised the repo rate by 50 basis points (bps) to 4.90 per cent. The RBI MPC retained GDP forecast for FY23 at 7.2 percent, FY23 inflation at 6.7 percent against 5.7 percent previously.
Earlier, in May, the RBI had come out with a surprise 40 bps hike to control inflation.
Repo rate is the interest rate at which the RBI lends short-term funds to banks.
Home, auto and other loan EMIs will rise after the Reserve Bank of India (RBI) on Wednesday raised the key interest rate by 50 basis points, the second increase in five weeks, to rein in rise in prices that it saw continuing to hurt consumers in the near term.
With inflation persistently hovering above the upper tolerance limit of 6 per cent, the RBI's six-member rate-setting panel voted unanimously to raise the lending rate of the repurchase (repo) rate by 50 basis points to 4.90 per cent, Governor Shaktikanta Das said.
Persistent selling by FIIs impacts market sentiment
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd said, It was yet another volatile session with key indices moving in a range even as the rate hike by the RBI was more or less on expected lines. The volatile bond and currency market coupled with persistent selling by the FIIs continued to have a bearing on the overall market sentiment.
Technically, on daily charts the Nifty has formed a bearish candle which suggests continuation of weakness in the near future. In addition, a late afternoon sell-off from the day's highest level also indicates further weakness from the current levels. If the index closes below the level of 16,275, it could retreat further up to 16,200-16,150. Similarly, 16,500 would act as an immediate hurdle for the market and above the same, it would retest the level of 16,600-16,635.
Om Mehra Research Associate Choice Broking said, Technically, Nifty has formed a bearish candlestick on the daily timeframe. Bulls remain in trap from past few days as Index failed to close in green at least two continuous days. From the hourly chart, Nifty 16500 levels have turned into resistance from the support suggesting further weakness amid weekly expiry. However, the view negated closing and sustaining above 16,550 levels. Indicators such as ATR and ADX remained on the weaker side on the daily chart as well.
Advance Decline Ratio remained at 0.73 percent indicating slight dimness too. The Nifty may find support around 16,100 followed by 16,000 levels, on the upside 16,550 may act as an immediate hurdle. On the other hand, Bank Nifty has support at 34,200 levels while resistance at 35,700 levels. Overall, Nifty is showing weakness on a chart, Investors and traders are advised to work with option strategies to neutralize the volatility amid weekly expiry.
Mohit Nigam, Head - PMS, Hem Securities said, Indian benchmark indices ended lower for the 4th consecutive day. On the technical front, the key resistance levels for Nifty50 are 16,500 and on the downside 16,200 can act as strong support. Key resistance and support levels for Bank Nifty are 35,500 and 34,700 respectively.
Stock markets fail to hold onto early gains
Prashanth Tapse, Vice President (Research), Mehta Equities Ltd, Markets failed to hold onto early gains and ended the day on a negative note post the RBI rate hike. Nifty ended in the red for the fourth consecutive day as RBI MPC hiked key interest rates by 50 basis points. The cynic FIIs at the moment are obsessed with the negativity surrounding Dalal Street in the backdrop of inflation concerns amidst spiking WTI oil prices at $120.97 a barrel. Also, bad news was that the Indian rupee hit a fresh low against the US Dollar despite Tuesday's RBI intervention in the foreign exchange market. Technically speaking, after today’s down-move, the downside risk on Nifty is seen at the 16121 mark.
Deepali Fortuna PR: Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
“USDINR spot closed 2 paise higher at 77.73 levels. RBI policy was non-event. RBI is expected to keep raising rates in the upcoming meetings as inflation can remain above its target for the full financial year. USDINR could continue to see low volatility. A range of 77.40 to 78.00 remains in play over the near term.”
Rupee gains
The rupee appreciated by 3 paise to settle at 77.75 (provisional) against the US dollar on Wednesday after the RBI raised the interest rate by 50 basis points to 4.9 per cent. However, weak domestic markets, rising oil prices and persistent foreign capital outflows restricted the rupee's gain, forex dealers said.
The Reserve Bank of India on Wednesday raised the key interest rate by 50 basis points, the second increase in five weeks, to rein in the rise in prices that it saw continuing to hurt consumers in the near term. The rate hike comes on the back of a 40 bps increase effected by the RBI at an unscheduled meeting on May 4.
At the interbank forex market, the local unit opened strong at 77.70 against the greenback and witnessed an intra-day high of 77.64 and a low of 77.79. It finally settled at 77.75, a rise of 3 paise over its previous close.
In the previous session, the rupee had settled at a lifetime low of 77.78 against the greenback.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
“USDINR spot closed 2 paise higher at 77.73 levels. RBI policy was non-event. RBI is expected to keep raising rates in the upcoming meetings as inflation can remain above its target for the full financial year. USDINR could continue to see low volatility. A range of 77.40 to 78.00 remains in play over the near term.”
Asian markets close higher
Elsewhere in Asia, markets in Shanghai, Tokyo and Hong Kong ended higher, while Seoul settled lower.
European markets were trading mostly lower during afternoon trade.
Stock markets in the US had ended with gains on Tuesday.
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