Indian shares drop after cenbank's rate pause, hawkish comments
Updates at 11:12 a.m. IST
By Bharath Rajeswaran
BENGALURU, Aug 8 (Reuters) -Indian shares were lower on Thursday after the Reserve Bank of India stood pat on interest rates, as expected, and maintained its hawkish policy stance due to stubbornly high food inflation.
The NSE Nifty 50 index .NSEI was down 0.4% at 24,199.9, as of 11:12 a.m IST, and the S&P BSE Sensex .BSESN had shed 0.38% to 79,161.1.
Both indexes were down about 0.3% ahead of the decision. They extended losses to about 0.6% immediately after the policy announcement, before trimming some losses.
The RBI kept rates unchanged for a ninth straight meeting and maintained its 'withdrawal of accommodation' policy stance. Governor Shaktikanta Das warned against complacency just because core inflation was easing and noted that the pace of moderation in inflation has been slow.
The commentary was slightly more hawkish than expected, according to two analysts.
"The message is coming loud and clear from the RBI that it is firmly focussed on ensuring that inflation control takes precedence because domestic inflation dynamics will go a long way in influencing the timing of a rate cut," said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
However, the RBI maintaining its fiscal 2025 growth forecast at 7.2% shows the economy remains in fine fettle, Dadheech said.
"August is traditionally a volatile month. With high domestic valuations and weak global cues, we expect profit booking to continue and benchmarks to remain choppy."
The RBI has kept rates unchanged since February 2023 and the Nifty 50 has surged about 36% in that period, helped by strong economic growth, corporate earnings and surplus liquidity. However, at near all-time highs, the markets have succumbed to bouts of profit-taking.
Eleven of the 13 major sectors logged losses on the day. IT .NIFTYIT, energy .NIFTYENR and metals .NIFTYMET shed about 1% each.
Tata Motors TAMO.NS gained about 1.7%, the second most on the Nifty, after its new EV "Curvv.ev" was considered to be a potential market share gainer given a competitive price.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sherry Jacob-Phillips, Janane Venkatraman and Savio D'Souza
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
