Why stock market is down today after RBI’s MPC meeting?
Stock market today: After the Reserve Bank of India’s (RBI’s) announcement to keep key rates unchanged post-monetary policy meeting, the Indian stock market witnessed strong selling pressure on Thursday.
The Nifty 50 index lost to the tune of 1%, touched an intraday low of 21,709 and logged near 225 points during Thursday deals.
After RBI’s announcement to keep repo rates unchanged at 6.5%, the BSE Sensex today witnessed a sharp sell-off touched an intraday low of 71,405 mark and recorded near 750 points loss in a single day. Likewise, Bank Nifty index today lost around 600 points while touching the intraday low of 45,227 level.
Why Indian stock market is down today?
On reason for stock market crash post-RBI MPC meeting, Sunil Nyati, Managing Director of Swastika Investmart said, “The RBI keeps interest rates unchanged, as expected, but the tone is still cautious about inflation, and there are no indications of an interest rate cut in the near term, while the market was expecting a dovish stance after the government kept the fiscal deficit at 5.1% in the budget. The market didn’t react much to it, but the bias is bullish, so we can expect the banknifty to catch up in the medium term. “
On the outlook for the Nifty 50 today, Sunil Nyati said, “Technically, 22125 is acting as an immediate hurdle; above this, we can expect a rally towards 22222 and 22350 levels. On the downside, a 20-DMA of 21670 is a strong support level.”
On the outlook for the Bank Nifty today, Swastika Investmart expert said, “Bank Nifty has formed a bottom 45500–44800 zone; however, a 20-DMA of 46300 is an immediate resistance; above this, we can expect a rally towards the 46800–47000 zone.”
What next after RBI announcement?
Expecting the volatility in the Indian stock market to continue, Divam Sharma, Founder and Fund Manager at Green Portfolio said, “An unchanged repo gave way for some fleeting enthusiasm for the markets but we don’t see much significant impact, particularly in the long run. Equity investors should remain cautious as markets are volatile and this volatility is expected to continue.”
On sectors that are expected to remain volatile after the RBI’s status quo announcement on interest rates, Anil Rego, Founder and Fund Manager at Right Horizons said, “The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and in H1 of FY24 benefitting from the hikes and credit growth being robust and persistent. Prolonged rate cuts will eventually lead to narrowing NIM but we expect rate cuts to begin in the last quarter and hence the trend in the banking sector is likely to continue in FY24. NBFCs will be best positioned to benefit from cuts in rates as credit growth will improve followed by banks.”
Anil Rego went on to add that the credit-sensitive sectors like auto and real estate will see higher demand.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 08 Feb 2024, 11:42 AM IST
