Market trading in green after the RBI increased the repo rate by 50 basis points

The key policy repo rate, at which the RBI loans to banks, was increased by 50 basis points by the central bank’s rate-setting panel. The market had widely anticipated an increase of 35 basis points.

Advertisement

After the Reserve Bank of India (RBI) increased policy rates for the third time in a row to curb runaway inflation, Indian stock markets rose. According to market analysts, front-loading rates will support the domestic currency and increase FPI inflows.

The key policy repo rate, at which the RBI loans to banks, was increased by 50 basis points by the central bank’s rate-setting committee. The market was generally anticipating a rise of 35 basis points.

Following the remark by RBI governor Shatikanta Das, the benchmark Nifty increased by 69 points, or two-fifths of a percent, to 17,451, while the Sensex increased by half a percent to 58,567. At 79.08 to the dollar, the Indian rupee was up about 0.5 percent.

The majority of market analysts predict that the Nifty will trade between 17000 and 17800. The trend line connecting the lower highs of October 2021, January 2022, and April 2022 extends from 17750 to 17800.

Following the policy announcement, Nilesh Shah, MD & CEO, Kotak AMC, said, “Markets will be happy. The repo rate hike of 50 bps is front loaded to ensure that easing inflation comes below RBIs upper band of 6 % by 4Q FY23.”

For the sixth consecutive month, India’s retail inflation rate exceeded the RBI’s upper tolerance limit of 6% and remained above the 7 percent mark in June.

Nirmal Jain, chairman, IIFL Group, said the front loading would support the rupee and attract FII inflows, which have been positive since July after nine months of selling.

Subscribe to our newsletter
Subscribe to our newsletter
Sign up here to get the latest news delivered directly to your inbox.
You can unsubscribe at any time