Mumbai: The Indian stock markets' key indices, Sensex and Nifty, slumped by more than two per cent on Wednesday after the Reserve Bank of India (RBI) made a surprise announcement to hike policy repo rate by 0.40 per cent.
The 30 stock S&P BSE Sensex slumped 1306.96 points or 2.29 per cent to 55,669.03 points against its previous session's close at 56,975.99 points. Earlier, the Sensex started the day on a positive note at 57,124.91 points and rose to a high of 57,184.21 points in the early morning trade.
However, the markets turned negative in the morning trade itself. The selling pressure intensified after the Reserve Bank of India (RBI) Governor Shaktikanta Das announced that the Monetary Policy Committee (MPC) has unanimously decided to hike the policy repo rate by 0.40 per cent or 40 basis points to 4.40 per cent with immediate effect.
This is the first increase in the policy repo rate since May 2020 marking a reversal of the RBI's monetary policy stance.
The Monetary Policy Committee (MPC) decided to hold an off-cycle meeting on 2nd and 4th May, 2022 to reassess the evolving inflation-growth dynamics and the impact of the developments after the MPC meeting of April 6-8, 2022, Das said.
Following the RBI Governor's announcement, the Sensex tumbled to a low of 55,501.60 points.
This is the third consecutive session of losses in the Indian equities market's key indices. The Sensex had lost 84.88 points or 0.15 per cent on Monday, the previous trading day.
The broader Nifty 50 of the National Stock Exchange slumped 391.50 points or 2.29 per cent to 16,677.60 points against its previous session's close at 17,069.10 points.
The index heavyweights Reliance Industries and HDFC Bank witnessed heavy selling pressure. Reliance Industries tumbled 3.14 per cent to Rs 2693.15. HDFC Bank dipped 3.34 per cent to Rs 1356.25.
Titan slumped 4.11 per cent to Rs 2288.40. Bajaj Finance tumbled 4.29 per cent to Rs 6340.90. Bajaj Finserv slumped 4.18 per cent to Rs 14325.40. IndusInd Bank dipped 3.98 per cent to Rs 978.40.
Only three of the 30 scrips that are part of the benchmark Sensex closed in the positive. Power Grid Corporation surged 2.75 per cent to Rs 237.60. NTPC and Kotak Bank also closed in the positive.