Sensex Cracks 1300 Points As RBI Hikes Repo Rate In Unexpected Move

Indices in the backdrop of the repo rate being hiked unexpectedly to now 4.4% have plunged sharply. At the time of writing this copy at around 2:48 pm, Sensex traded lower by 1300 points at 55,673, while Nifty also plunged by 400 points to 16668. Bank Nifty was seen in pressure too, dropping as much as 888 odd points. "RBI remains steadfast to control inflation, ensure growth", says RBI Governor Das.

The surprising and unexpected move that was indeed not part of the scheduled RBI MPC meet comes just ahead of the Fed meet, from which investors have already discounted for a 50 basis point hike.

The inflationary pressure has been mounting world over and central banks across the globe are on a monetary tightening spree and the same would have nudged the RBI to hike rates.

Within the sectoral indices, all the interest sensitive sectors such as auto and realty took a sharp beating together with other sectors. The Nifty Media index saw the most blow followed by Nifty Realty of over 3%.

"The repo rate hike and CRR hike announced by the RBI Governor today in an unscheduled call is a negative event for markets. Barely a month ago the same MPC had not only kept the rates unchanged but had also maintained the accommodative stance. This sudden U-turn will now raise worries whether the RBI is suddenly panicking or reacting to the rate hikes by other central banks, especially the Fed," Abhay Agarwal, Founder, and Fund Manager, Piper Serica is quoted as saying in a leading business publication.