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Indian Equities Extend Losses As Hawkish RBI Spooks Investors

The Nifty 50 index closed 0.44 per cent lower at 18,560.50 and the S&P BSE Sensex settled 0.34 per cent lower to 62,410.68

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Indian equities ended lower on Wednesday, hitting their one-week low as Reserve Bank of India (RBI) governor while announcing an increase in repo rate for the fifth consecutive time this year sounded hawkish, stating that the fight against inflation is not yet over.

The RBI’s Monetary Policy Committee (MPC) raised the policy repo rate by 35 basis points (bps) to cool off inflation.

The Nifty 50 index closed 0.44 per cent lower at 18,560.50 and the S&P BSE Sensex settled 0.34 per cent lower to 62,410.68.

While majority of Nifty’s sectoral indices closed lower, the Nifty FMCG index ended 1 per cent higher after RBI’s comments about demand recovery in both urban and rural India.

“The RBI has given a ‘Main Hoon Na’ (we are there) policy, reassuring the market. In a world where central banks are fighting to regain credibility, the RBI stands tall managing conflicting objectives of growth and inflation admirably. A data-driven RBI will keep on playing balls on merit and continue to keep the growth score board moving with inflation under check,” said Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company.

Investors will now watch out for the US consumer price index data due next Tuesday which will give indication about Fed’s rate hike pace.

Among stocks, consumer goods giants Hindustan Unilever and ITC were the top gainers on the Nifty 50 index, closing 2 per cent and nearly 0.8 per cent higher, respectively, while carmaker Tata Motors led losses, declining 1.6 per cent.


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