Indian equities continue to trade lower even after the Reserve Bank of India cut repo rate on Wednesday by 25 basis points to 6% in its latest credit and monetary policy review. The central bank of India has reduced the key policy rates for the first time in this fiscal year, as was expected given the constantly falling inflation. The benchmark Sensex was trading 236 points lower after the policy was announced while the broader Nifty 50 was slipped 48 points down to the day’s low of 10,066.95 points. The most awaited RBI’s decision to lower the policy rate to 6% failed to boost sentiment.
The revised repo rate at 6% is the lowest in six-and-a-half years since November 2010. The central bank also kept the policy stance ‘neutral’ with an eye on inflation, which it said will be watched for a rise later this year. Accordingly, the revised reverse repo rate and the marginal standing facility rate will now stand at 5.75% and 6.25%, respectively, the RBI said in a statement. This is the first rate cut since October 2016 and the interest rate is now at a 6-year low. They added that no change in cash reserve ratio too had a bearing.
Shares of Infosys, ITC, TCS, ICICI Bank and Kotak Mahindra Bank dragged the benchmark index most. BSE Sensex had touched an all-time high of 32,686.48 in the intra-day trade in the opening bell. The wider Nifty too slipped from a record high by falling 0.45%, to 10,068.70. The gauge had touched an all-time high of 10,137.85 at the outset
The central bank also retained the growth forecast at 7.3% for the current fiscal. The banking index, however, was marginally up by 0.14% as shares of state-run SBI rose 0.24%, Axis Bank 0.77% and ICICI Bank 0.25%. However, the BSE realty index was 0.27% down while auto shed 0.16%.