Nifty, Sensex trade volatile, Bank Nifty crashes as RBI MPC maintains repo rate at 6.5%, hikes inflation forecast to 5.4% Domestic indices, NSE Nifty 50 and BSE Sensex, dipped by 0.5% each in the face of volatility after the RBI MPC unanimously opted to keep the repo rate unchanged at 6.5%. However, the markets had priced in the RBI policy decision, but they were caught by surprise when the RBI Governor Shaktikanta Das hiked the inflation forecast for the current financial year to 5.4% from 5.1%. Prior to the policy announcement, both Nifty 50 and Sensex were trading in negative territory; Sensex declined by 238 points and Nifty by 65 points. The banking stock index, Bank Nifty, saw a steep drop of almost 270 points, with Bandhan Bank and Bank of Baroda leading the losses following the announcement. Before the announcement, Prashanth Tapse, Senior VP (Research), Mehta Equities said, “Volatility is likely to be the hallmark of the day, as investors look forward to the RBI’s credit policy outcome on interest rates and its forward looking comments on economy and inflation. The outlook will give some sense to investors on where the inflation and economy could be heading in the near to medium term.” “Incremental CRR hike (Rs 95,000 crore of liquidity sucked out) to be temporary in nature to address liquidity addition on account of withdrawal of Rs. 2000 notes. This could dampen short term bond yields in the near term. Bond prices could see relief buying as the mood was quite sombre assuming a very hawkish commentary,” said Lakshmi Iyer, CEO – Investment & Strategy, Kotak Alternate Asset Managers.
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FII and DII trades: Foreign Institutional Investors (FII) have been net buyers of domestic stocks for successive days now. On Wednesday, FIIs pumped in Rs 2,347 crore. Domestic Institutional Investors (DII) have been net sellers, pulling out Rs 510 crore yesterday.
IPO watch: Syrma SGS Technology enters the final day of bidding today. So far the issue, that opened last week, has been subscribed 2.27 times. Retail investors have subscribed their portion 2.66 times while NIIs have bid for their quota 3.58 times and QIB portion has been bid for 0.71 times.