The Nifty 50 ended lower on Wednesday, October 7, after the Reserve Bank of India raised its policy repo rate and shifted its monetary policy stance towards calibrated tightening.
The benchmark index declined 173.05 points, or 0.76%, to settle at 22,603.05. The BSE Sensex also fell 429.11 points, or 0.59%, to close at 72,638.70. Both indices ended a two-session winning streak.
Editorial Insight
Key Highlights
Important points readers should notice.
Nifty 50 closed at 22,603.05.
The index fell 173.05 points, or 0.76%.
Sensex declined 429.11 points, or 0.59%, to 72,638.70.
RBI raised the repo rate by 25 basis points to 5.50%.
The RBI shifted its stance from neutral to calibrated tightening.
The rate increase was the first since February 2023.
The market reaction followed the RBI Monetary Policy Committee's decision to increase the repo rate by 25 basis points from 5.25% to 5.50%. The October increase was the first repo-rate hike since February 2023. The RBI also changed its policy stance from neutral to calibrated tightening.
The RBI's decision came amid concerns over inflation, elevated energy prices and tighter global financial conditions. The central bank also raised its real GDP growth forecast for financial year 2026-27 to 7.1% from 6.7%.
Rate-sensitive sectors came under pressure during the session. Realty, auto and FMCG stocks were among the sectors that declined, while the metal index also recorded a significant fall.
Editorial Analysis
Why This Matters
The RBI's rate decision represents a change in the direction of monetary policy after a period of lower policy rates. For equity markets, higher policy rates can affect borrowing costs, corporate financing conditions and investor expectations. The immediate market reaction was negative, although individual sectors and stocks responded differently to the policy announcement.
The broader market showed a mixed performance. The Nifty Midcap 100 declined 0.63%, while the Nifty SmallCap 100 gained 0.30%.
