Market falls as RBI increases repo rate, cuts GDP growth forecast

The fall comes as RBI hinted that it would keep fighting high inflation rate and lowered its FY23 GDP growth forecast from 7per cent to 6.8 per cent.

Published: 08th December 2022 07:37 AM  |   Last Updated: 08th December 2022 07:37 AM   |  A+A-

sensex

Image used for representational purpose only. (File Photo)

By Express News Service

NEW DELHI: Even as the Dalal Street had factored in that the RBI would go for a 35 bps repo rate hike, the equity market closed the Wednesday session in red with the BSE Sensex falling for the fourth straight session and the NSE Nifty giving up its 18,600 level. 

The fall comes as RBI hinted that it would keep fighting high inflation rate and lowered its FY23 GDP growth forecast from 7 per cent to 6.8 per cent. The top bank has now raised repo rate to 6.25 per cent. The two benchmarks have now corrected about 1.50 per cent over the last 5 sessions amid widespread profit booking at record high level. Sensex on Wednesday fell 215.68 points or 0.34 per cent to end at 62,410.68 while the broader Nifty closed at 18,560.50, lower by 82.25 points or 0.44 per cent.

“As the economy deals with the global headwinds, the RBI has become more realistic, lowering FY23 GDP growth forecast from 7 per cent to 6.8 per cent. The focus remains on fighting inflation, which will lead to rise in rates in future. Along with a global slowdown, corporate earnings forecast for H2FY23 and FY24 can downgrade. The market is currently trading at premium valuations, a slowing earnings growth will impact market sentiment,” said Vinod Nair, head of research, Geojit Financial.

Investors at large dumped realty and automobile stocks as they fear higher EMIs may dent demand going ahead. Tata Motors, Bajaj Auto, Hero MotoCorp, DLF and Godrej Properties fell between 1.5-2.5 per cent on Wednesday. Index heavyweight Reliance Industries also shed 1.61 per cnet. Shrikant Chouhan, head of equity research (Retail), Kotak Securities, said the downside in markets comes due to their premium valuation, while investors turned cautious as RBI’s fight for taming multi-year high inflation is not over as they continued on their stance. Also, weak global cues further added to their woes. 

While the equity market plunged, the rupee and bond market witnessed an uptick. At the interbank forex market, the Indian rupee ended its three-day losing streak to end slightly higher at 82.47 against the dollar compared to the previous day’s print of 82.6150. 



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp