Sensex settles over 170 points after RBI keeps repo rates unchanged at 6%

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Published: October 4, 2017 4:15:54 PM

Sensex and Nifty ended higher on Wednesday after welcoming the Reserve Bank of India's move to keep the repo rates unchanged at 6% in its latest bi-monthly monetary policy today.

Bombay Stock Exchange building. (Image: Reuters)

Sensex and Nifty ended higher on Wednesday after welcoming the Reserve Bank of India’s move to keep the repo rates unchanged at 6% in its latest bi-monthly monetary policy today. BSE Sensex gained 174 points to close at 31,671.71 points and NSE Nifty jumped 55 points to finish at 9,914.9 points. In the intraday trade, the benchmark Sensex advanced as much as 230 points to hit the day’s high of 31,752.16 points while NSE Nifty added 79 points to mark the day’s high of 9,938.3 points.

Shares of Sun Pharma (up 2.98%), Reliance Industries (up 2.61%), ITC (up 2.3%), Kotak Mahindra Bank (up 2.16%), Dr Reddy’s (up 1.99%), and Mahindra & Mahindra (up 1.89%) were the top gainers on Sensex while Bharti Airtel lost 2.26% to close at 376.95 on BSE. The stocks of heavyweight companies such as Reliance Industries, ITC, Kotak Mahindra Bank, HDFC, Sun Pharma, Mahindra & Mahindra, and Tata Motors contributed the most to the index up move. Collectively these six stocks alone added about 220 points to the 30-share barometer Sensex whereas shares of HDFC Bank, ICICI Bank, Bharti Airtel, and Infosys capped the gains.

The RBI’s 6% repo rate, last revised in August, is lowest in nearly seven years since November 2010. The central bank kept the policy stance neutral with the objective of limiting the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth. The Reserve Bank of India’s fourth bi-monthly monetary and credit policy review comes at a time when the government is grappling with a slowing economic growth, whereas the central bank is staring at a rising headline inflation.

Key highlights of RBI’s bi-monthly policy:

  1. RBI kept the repo rate unchanged at 6%, reverse repo rate unchanged at 5.75%, as expected.
  2. Monetary Policy Committee maintains stance as ‘Neutral’.
  3. RBI cuts SLR by 50 basis points to 19.5% effective from 14 October fortnight.
  4. Real gross value added growth seen at 6.4% for July-September, 7.1% for October-December, 7.7% for January-March, and at 7.4% for the next entire financial year FY2018-19.
  5. MPC expects inflation to rise from its current levels to 4.2-4.6% in the second half of this fiscal.
  6. MPC voted 5-1 in favour of status quo on repo rate. MPC member Dholakia sought at least 25 bps cut in Repo rate.
  7. RBI says MPC is focused on to keep CPI inflation close to 4% on a durable basis.
  8. HTM limit to be cut to 19.5% in phases.
  9. RBI slashed economic growth forecast to 6.7% from 7.3% for FY 2018.
  10. RBI forecasts CPI inflation at 4.2% in Oct-Dec quarter; 4.6% in Jan-Mar quarter.
  11. Next MPC meeting on 5-6 December.

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