Domestic market benchmarks traded in the green after the Reserve Bank of India (RBI) raised the repo rates by 50 bps to 5.4%, on expected lines, and retained its stance at 'withdrawal of accommodation.'
With this, the repo rate is now back to pre-pandemic levels and is at its highest since August 2019.
RBI also retained the real GDP growth projection for FY23 at 7.2% while the central bank projected FY23 CPI inflation at 6.7%.
The rate hike, the third in this financial year, was mostly on expected lines as inflation is soaring primarily due to geopolitical issues.
''On its mission to curb domestic inflation, the RBI has increased the repo rate by 50 bps in the MPC meeting today to 5.4%. The ultimate impact of this decision on the inflationary pressure might be equally dependent upon the supply-side performance of the economy, where the recent dropdowns in the GDP growth estimates by IMF of 80bps to 7.4% might be seen as a challenge. Hence, it will be interesting to see, how these consecutive rate hikes, keeping in mind the concerning global economic indicators, iron out the path to long term growth for India," said Rohin Agarwal, Vice President at Avener Capital.
Sensex rose more than 280 points in the trade so far and among the rate-sensitive sectors, the banking and finance indices climbed almost a percent each. The realty index also traded with gains while the auto index was slightly lower.
Sensex was up 218 points, or 0.37%, at 58,517 at 10:40 am with 22 stocks in the green and 8 stocks in the red.
Shares of UltraTech Cement, ICICI Bank, Bharti Airtel, Wipro and SBI were among the top gainers while those of Maruti, Reliance Industries, IndusInd Bank, Power Grid and HDFC were among the top laggards.
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