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The Reserve Bank of India’s monetary policy committee (MPC) hiked the repo rate by another 50 basis points on June 8 as it continues to fight against inflation. With this, the repo rate stands at 4.9%. On May 4th, the RBI had hiked the repo rate by 40 bps and the CRR by 50 bps in an unscheduled announcement.

Benchmark indices were trading volatile on Wednesday. They extended losses briefly and turned positive after the Reserve Bank of India’s (RBI) announcement. The BSE Sensex was up 0.35% at 55,299.30 points while the NSE Nifty was at 16,470.25 points, up 0.33%.

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Banks, Financials, Metals, PSBs and Realty indices held strong gains on the Nifty, however, Auto, Pharma, FMCG and Consumer Durables were subdued. 

Some of the top gainers were Jindal Steel and Power, DLF, Bank of Baroda, PI Industries, SBI Cards, SBI, Bajaj Finance, SAIL, Hero MotoCorp and Tata Steel. On the flip side, ICICI Lombard, Bajaj Holdings, Havells India Cipla, ICICI Prudential, Bharti Airtel Marico and Reliance Industries were some of the top losers.

In general, banking stocks gained after the announcement. S&P BSE Bankex was trading 336.17 points higher at 40,712.06  and Bank Nifty gained 36 points to 35,066 on Wednesday’s early trades. 

“Up to 50 bps rate hike by the RBI is already discounted by the market and, therefore, the central bank’s guidance on inflation and rates will be more important. Inflation for FY23 is likely to be around 6.8% forcing the RBI to sound hawkish,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

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