Wednesday, May 4, 2022

Indices tumbles ~ 2% after surprise rate hike by RBI

Indian stock markets tanked on Wednesday after the Reserve Bank of India stunned the market with an increase in policy rates, citing inflationary pressures .The Reserve Bank of India's monetary policy committee, in an off-cycle meeting, raised key lending rate by 40 basis points. Sensex slumped 1,306 points to end at 55,669 after the RBI rate hike, while Nifty tanked 391 points to 16,677Although the rate hike was anticipated, the sudden announcement of a 40 bps increase in repo rate along with a 50 bps increase in CRR in response to the rising inflation spooked markets leading to a heavy selloff. Global markets are also trading cautiously ahead of the upcoming Fed meeting, as an increase of more than 50 bps will extend the current consolidation phase,.

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