Sensex, Nifty Halt Record Closing Spree After RBI Rate Hike

Closing Bell: Sensex Snaps Eight Day Winning Streak

Indian equity benchmarks halted their record closing spree after Reserve Bank of India raised interest rate for second time in current financial year to a two-year high.

The S&P BSE Sensex snapped its best winning streak in over two months to close 0.2 percent or 85 points lower at 37,522 and the NSE Nifty 50 index declined 0.1 percent or 10 points to 11,346.

The Monetary Policy Committee voted 5-1 to hike the repo rate from 6.25 percent to 6.5 percent to rein in inflation and stabilize the declining rupee. The decision was in line with expectations. Of the 53 economists polled by Bloomberg, 40 had forecast a rate hike at the August policy meeting.

Rate sensitive stocks were worst hit as the Nifty Auto index fell 0.8 percent and the Nifty Private Bank index declined 0.8 percent. On the other hand, Nifty Pharma index was top sectoral gainer, up 1.3 percent.

Bond yields dropped after RBI maintained its neutral stance while raising repo rate by 25 basis points. The yield on 10 year government bond which rose 8 basis points after RBI policy decision fell 5 basis points to 7.72 percent.

Reserve Bank of India's Monetary Policy Committee (MPC) raised repo rate by 25 basis points to a two-year high of 6.5 percent.

Key highlights from Reserve Bank of India Monetary Policy Decision:

• Repo rate hiked 25 basis points to a two-year high of 6.5 percent
• Reverse repo rate stands at 6.25 percent
• Marginal standing facility at 6.75 percent
• RBI's Monetary Policy Committee maintains neutral stance
• MPC targets achieving medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent
• MPC remains sanguine on growth and maintained its projection of 7.4 percent GDP
• MPC voted 5-1 in favor of a rate hike
• CPI inflation seen at 4.6 percent in Q2, 4.8 percent in H2 FY19, 5 percent in Q1 FY20
• Banks, NBFCs allowed to co-originate loans for priority sector
• Inflation is projected at 4.6 percent in Q2, 4.8 percent in H2 of 2018-19 and 5.0 percent in Q1
• RBI to continue to actively monitor liquidity, says deuty governor Viral Acharya

Reserve Bank of India's Monetary Policy Committee raised repo rate by 25 basis points to a two-year high of 6.5 percent.

The equity markets continued to trade lower while the bond yield spiked after the RBI decision.

The S&P BSE Sensex fell 0.27 percent 118 points to 37,480 and the NSE Nifty 50 index declined 0.3 percent or 29 points to 11,325. Yields on the 10-year government bond rose 8 basis points to 7.85 percent.