Rate-sensitive stocks keep mkts in red amid status quo on Repo

Mumbai: Equity benchmark indices Sensex and Nifty closed nearly 1 per cent down on Thursday after the Reserve Bank of India decided to keep the policy rate unchanged for the ninth time in a row and termed food inflation ‘stubborn’.

The 30-share BSE Sensex declined by 581.79 points or 0.73 per cent to settle at 78,886.22 in a volatile trade. During the day, it tumbled 669.07 points or 0.84 per cent to 78,798.94. The NSE Nifty declined by 180.50 points or 0.74 per cent to close at 24,117. During the day, it tanked 217.8 points or 0.89 per cent to 24,079.70. Analysts said continuous foreign fund outflows and weak trends in the US and European markets drove domestic equities lower.

The market capitalisation (mcap) of BSE-listed companies fell by Rs2.82 lakh crore to Rs4,45,75,507.12 crore (Rs445.75 lakh cr or $5.31 trn).

“The domestic market reversed its earlier gains as RBI’s held its current policy rates with a caution to revise upward the CPI and moderate the growth forecast for Q1,” said Vinod Nair, head (research), Geojit Financial Services. The Reserve Bank of India on Thursday expectedly kept the benchmark interest rate and stance unchanged for the ninth straight policy meeting, saying it cannot afford to look through persisting high food inflation and has to remain vigilant to prevent spillover. Retaining its unambiguous focus on inflation, the Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the benchmark repurchase or repo rate unchanged at 6.50 per cent. The panel, whose four-year term ends in October, also decided to retain a policy stance at ‘withdrawal of accommodation’ to aid MPC’s focus on bringing inflation towards its 4 per cent target. Inflation climbed to 5.08 per cent in June, primarily driven by the food component. RBI Governor Shaktikanta Das said food inflation remains ‘stubbornly’ high.