Sensex falls 581 pts as RBI retains policy stance amid stubborn inflation

Equity benchmark indices Sensex and Nifty both closed nearly 1% down on Thursday after the Reserve Bank of India decided to keep the policy rate unchanged for the ninth consecutive time. The 30-share BSE Sensex declined by 581.79 points or 0.73% to settle at 78,886.22 in a volatile trade, after tumbling 669.07 points or 0.84% during the day. The NSE Nifty declined by 180.50 points or 0.74% to close at 24,117, after a daytime drop of 217.8 points or 0.89% to 24,079.70. Market analysts attributed the decline to continuous foreign fund outflows and weak trends in the US and European markets.

The Reserve Bank of India expressed concerns over persisting high food inflation and indicated the need to remain vigilant to prevent spillover. The Monetary Policy Committee decided to keep the benchmark repurchase or repo rate unchanged at 6.50%, retaining a policy stance at “withdrawal of accommodation” to focus on bringing inflation towards its 4% target. RBI Governor Shaktikanta Das highlighted that food inflation remains “stubbornly” high, which has led the RBI MPC to adopt a wait-and-watch approach, keeping the interest rates unchanged until further clues are received from the US Federal Reserve.

Among the 30 Sensex firms, Asian Paints, Infosys, JSW Steel, UltraTech Cement, Power Grid, Larsen & Toubro, HCL Technologies, and Tata Steel were the biggest laggards. Conversely, Tata Motors, HDFC Bank, Bharti Airtel, ITC, IndusInd Bank, and Axis Bank were the gainers.

In the broader market, the BSE midcap gauge declined by 0.44% and the small-cap index dipped by 0.16%. Among the indices, metal tanked 2.02%, while IT (1.82%), utilities (1.62%), commodities (1.45%), teck (1.40%), and realty (1.22%) also declined, with healthcare being the only gainer. On Wednesday, the BSE benchmark rallied 874.94 points or 1.11%, while the NSE Nifty jumped 304.95 points or 1.27%. Overall, 2083 stocks declined, 1829 advanced, and 102 remained unchanged.