After Cenbank’s rate pause, Indian shares see a see drop down

After Cenbank's rate pause, Indian shares see a see drop down/Reuters

Reuters | August 8, 2024 | 12:52 PM IST | Breaking News | Follow on Google News

After Cenbank’s rate pause, Indian shares see a see drop down

After Cenbank’s rate pause, Indian shares see a see drop down

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), opens new tab was down 0.4% at 24,199.9, as of 11:12 a.m IST, and the S&P BSE Sensex (.BSESN), opens new tab 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), opens new tab, energy (.NIFTYENR), opens new tab and metals (.NIFTYMET), opens new tab shed about 1% each.

Tata Motors (TAMO.NS), opens new tab 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.

(Except for the headline, this story has not been edited by VoM News staff and is published from syndicated feed)

Reuters