Repo rate hike rattles bourses

Mumbai: BSE Sensex tumbled for the fourth session on the trot on Wednesday after the Reserve Bank raised the key interest rate by 35 basis points and lowered the country's GDP growth forecast to 6.8 per cent for the current fiscal due to continued geo-political tensions and tightening of global financial conditions.

The central bank also said it remains focused on bringing down inflation that has stayed above the comfort zone for 10 straight months. Subdued Asian markets and continued selling by foreign investors further weighed on investor sentiment, traders said. The 30-share BSE benchmark ended 215.68 points or 0.34 per cent lower at 62,410.68. Similarly, the broader Nifty fell 82.25 points or 0.44 per cent to 18,560.50.

"As the economy deals with the global headwinds, the RBI has become more realistic, lowering FY23 GDP growth forecast from 7 per cent to 6.8 per cent. The focus remains on fighting inflation which will lead to increase in interest rates in future. Along with a global slowdown, corporate earnings forecast for H2FY23 and FY24 can be downgraded. The market is currently trading at premium valuations, a slowing earnings growth will impact market sentiment," said Vinod Nair, head (research) at Geojit Financial Services.

Ajit Mishra, V-P (technical research), Religare Broking Ltd, adds: "Markets have been gradually drifting lower, however, rotational buying in index majors across sectors is capping the damage. Feeble global cues might continue to put pressure. In the current scenario, traders should focus on trade management and prefer sectors that are showing resilience for fresh buying."

Foreign Institutional Investors (FIIs) were net sellers in capital markets as they offloaded shares worth Rs 635.35 crore on Tuesday, according to exchange data.

Sector-wise, interest rate sensitive BSE realty, consumer durables and auto indices closed up to 1.11 per cent lower. In the broader markets, BSE smallcap and midcap indices lost up to 0.44 per cent.