Business is booming.

Sensex, Nifty rebound after 7-day fall; surge nearly 2% post RBI rate hike

NEW DELHI: Equity indices snapped 7-day losing streak as markets cheered Reserve Bank of India’s (RBI) rate hike decision.
The 30-share BSE benchmark jumped 1,016.96 points or 1.80 per cent to settle at 57,426.92. During the day, it rallied 1,312.67 points or 2.32 per cent to 57,722.63.
Similarly, the broader NSE Nifty climbed 276.25 points or 1.64 per cent to end at 17,094.35.
Among the 30-share Sensex pack, Bharti Airtel, IndusInd Bank, Bajaj Finance, Titan, Kotak Mahindra Bank, HDFC Bank, and Tata Steel were among the major gainers.
However, Dr Reddy’s, Asian Paints, ITC and Hindustan Unilever were the laggards.
Here are the top reasons for market surge:
* RBI policy decision
The RBI on Friday raised the benchmark lending rate by 50 basis points to 5.90 per cent in a bid to check inflation, which has remained above its tolerance level for the past 8 months.
In all, RBI has raised the benchmark rate by 1.90 per cent since May this year.
“The 50 bps rate hike by the RBI in today’s meeting was in line with expectations. The key highlights were the resilience shown by the Indian economy considering the turbulent global environment and concerns emanating from global growth slowdown and hawkish stances of various central banks,” Santosh Meena, Head of Research at Swastika Investmart told PTI.
* Banking sector leads market gains
The rate sensitive Nifty bank index rose 2.6 per cent, while the financials gained 2.2 per cent and metals added 2.2 per cent.
HDFC Bank surged 2.93 per cent to Rs 1422.40. Kotak Bank jumped 3.22 per cent to Rs 1821.25. ICICI Bank soared 2.22 per cent to Rs 862.80. State Bank of India closed 1.74 per cent higher at Rs 531.05.
“The banking sector is going to do well fundamentally on its own. Their credit growth is strong … If there is sufficient liquidity then the banks will not have to aggressively raise deposit rates, which means they can see a margin expansion in the near term,” Dhame said.
* Rate hike on expected lines
The Reserve Bank’s decision to hike the interest rate by half a percentage point on Friday was on expected lines and another increase by 50-60 basis points is likely this fiscal due to sticky inflation, analysts quoted by PTI said.
“Going forward, we expect inflation worries to continue from a seasonal food price shock and demand conditions gathering momentum…Our terminal repo forecast stands at 6.5 per cent, thus a rate hike of another 50-60 bps in the current cycle seems feasible,” Dipanwita Mazumdar, an economist with Bank of Baroda said in a report.
Sakshi Gupta, Principal Economist, HDFC Bank, said the RBI raised the policy rate by 50 bps as expected, aligning itself to aggressive monetary tightening globally.
Moreover, the rate move was in response to continued domestic inflationary risks and growth that broadly continues to hold up, she said.
* Global market sentiments
European stock markets climbed Friday but the pound and euro fell as traders assessed mixed growth and inflation data.
The pound jumped on revised figures showing the UK economy had avoided recession — but it swiftly fell back on expectations of an eventual downturn owing to sky-high inflation.
In the eurozone, consumer prices rocketed a record 10 per cent in September on soaring energy prices caused by Russia’s war on Ukraine, separate official data showed.
In the United States, Federal Reserve officials have again reiterated their intention to ramp up rates until they have tamed inflation, even if that means plunging the world’s top economy into recession.
(With inputs from agencies)

Leave A Reply

Your email address will not be published.