NEW DELHI: Markets on Thursday plunged after the Reserve Bank of India (RBI) decreased repo rate - the rate at which it lends to banks - via 25 foundation issues (bps). The benchmark BSE sensex crashed 554 issues or 1.38 in line with cent to close at 39,530, while the broader NSE Nifty cracked 178 issues or 1.48 in line with cent to settle at 11,844.
Financial shares tanked probably the most on both BSE and NSE platforms. On BSE, primary laggards come with IndusInd Bank, Yes Bank, State Bank of India, L&T and Tata Steel with their shares falling as much as 6.74 in line with cent. 23 out of 30 shares finished in red at the BSE index.
On NSE, the entire sub-indices witnessed losses with Nifty PSU Bank and Bank sliding as much as 4.90 in line with cent.
According to traders, investor sentiment took a success after the RBI reduced its benchmark lending rate to almost a nine-year low of 5.75 in line with cent.
Slashing benchmark lending charges for the third time this 12 months, the RBI stated its long term monetary policy stance shall be more accommodative.
"RBI reduced repo rate by 25 bps as expected. The change in stance to ‘accommodative' was a bit of a surprise. Debt markets will take this as a significant positive move though most of the rate cut cycle is probably over," Suvodeep Rakshit, senior economist, Kotak Institutional Equities informed news company PTI.
"The tone of the RBI policy was dovish and highlights the concerns on growth. We maintain our call for another 25 bps rate cut in August factoring in the benign inflation trajectory and the growing concerns on growth," Rakshit added.
The central financial institution's resolution to remove fees on NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement System) transactions additionally pulled the markets lower.
Financial shares tanked probably the most on both BSE and NSE platforms. On BSE, primary laggards come with IndusInd Bank, Yes Bank, State Bank of India, L&T and Tata Steel with their shares falling as much as 6.74 in line with cent. 23 out of 30 shares finished in red at the BSE index.
On NSE, the entire sub-indices witnessed losses with Nifty PSU Bank and Bank sliding as much as 4.90 in line with cent.
According to traders, investor sentiment took a success after the RBI reduced its benchmark lending rate to almost a nine-year low of 5.75 in line with cent.
Slashing benchmark lending charges for the third time this 12 months, the RBI stated its long term monetary policy stance shall be more accommodative.
"RBI reduced repo rate by 25 bps as expected. The change in stance to ‘accommodative' was a bit of a surprise. Debt markets will take this as a significant positive move though most of the rate cut cycle is probably over," Suvodeep Rakshit, senior economist, Kotak Institutional Equities informed news company PTI.
"The tone of the RBI policy was dovish and highlights the concerns on growth. We maintain our call for another 25 bps rate cut in August factoring in the benign inflation trajectory and the growing concerns on growth," Rakshit added.
The central financial institution's resolution to remove fees on NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement System) transactions additionally pulled the markets lower.
Sensex cracks 554 points after RBI announcement; Nifty ends below 11,850
![Sensex cracks 554 points after RBI announcement; Nifty ends below 11,850]()
Reviewed by Kailash
on
June 06, 2019
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