The S&P BSE Sensex index on Wednesday broke its 9 days of the record-breaking rally after the Reserve Bank of India (RBI), in its third bi-monthly Monetary Policy Committee (MPC) meeting of FY19, hiked the repo rates by 25 basis points to a 2-year high of 6.5%. The governor Urjit Patel chaired six-member MPC on Wednesday decided to raise the benchmark lending rates by a quarter for the second time under the rule Prime Minister Narendra Modi. This was the second straight hike in the repo rates after RBI raised the interest rates by 25 bps in June 2018 MPC.
Post-declaration of RBI’s repo rate decision, Indian stock markets seemed divided on the outcome of the central bank as benchmark Sensex tumbled 174 points to a day’s bottom of 37,432.91 and reversed back to 37,624.07 before closing 84.96 points lower at 37,521.62. The low of 37,432.91 and a high of 37,624.07 was observed within the last hour of stock market trading after RBI’s repo rate decision broke out at 2:30 pm (IST).
RBI’s repo rate hike on Wednesday fractured BSE Sensex 9 days of the continuous all-time high upsurge today. BSE Sensex managed to amass as much as 1,255.35 points to 37,606.58 (all-time closing high: recorded on 31 July 2018) in the span of 9 days from a level of 36,351.23 as on 19 July. Earlier in July last month, Sensex closed above the psychological level of 37,000 for the first time in stock market history on 27 July 2018 at 37,336.85.
RBI’s repo rate hike was in line with the street expectations. Earlier this week, UBS Securities indicated towards a 60% possibility of 25 bps hike in repo rates by RBI in the third MPC meet. “This step was very much anticipated due to increased yields and crude prices,” Sumit Bilgaiyan, Co-Founder and Director, Equity99 told FE Online. “Of late we have seen sharp fluctuations in currency as global risks increased due to the trade wars. It will be interesting to see how FOMC reacts to it. We believe market has already factored in this hike” Sumit Bilgaiyan said further.
Shares of Coal India (up 3.29%), ITC (up 1.74%), Sun Pharma (up 1.61%), ITC (up 1.51%) and Power Grid (up 1.02%) were the major gainers while shares of Vedanta (down 1.84%), Maruti Suzuki (down 1.75%), Bharti Airtel (down 1.68%), ICICI Bank (down 1.61%), Tata Steel (down 1.46%), HDFC (down 1.24%), HDFC Bank (down 1.09%), Axis Bank (down 0.95%) and Infosys (down 0.82%) were the major losers among the Sensex scrips.
Shares of India’s most valued company Reliance Industries Ltd surged 1.44% to hit an all-time high of Rs 1,202.95 before settling up 0.45% at Rs 1,191.15 on BSE. The Mukesh Ambani-controlled oil-to-textile-to-telecom conglomerate RIL surpassed the market capitalisation of TCS (Tata Consultancy Services) and became India’s first company with a stock market value of Rs 7.5 lakh crore. According to today’s closing, Reliance Industries Ltd held a market capitalisation of Rs 7.54 lakh crore.