scorecardresearchSensex, Nifty move higher as RBI surprises with a pause in rate hike

Sensex, Nifty move higher as RBI surprises with a pause in rate hike

Updated: 06 Apr 2023, 10:54 AM IST

RBI's move was cheered by the market. Rate sensitive sectors such as bank, auto and realty traded with gains.

RBI kept the repo rate unchanged on April 6.

RBI kept the repo rate unchanged on April 6.

Domestic equity benchmarks the Sensex and the Nifty traded in the green after the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) surprisingly decided to keep the repo rate unchanged at 6.5 percent.

The RBI MPC on April 6 kept the repo rate unchanged at 6.5 percent in the first bi-monthly policy for the new financial year 2023-24 (FY24) to assess the steps taken so far and will keep monitoring the inflation scenario. 

Reserve Bank governor Shaktikanta Das-headed MPC met on April 3, 5, and 6 for this review.

The MPC, however, maintained the 'withdrawal of accommodation' stance, signalling the fight against inflation remains its top priority and rates may move higher should the situation so warrant.

RBI Governor Shaktikanta Das said this decision was taken on the basis of the RBI's assessment of the economic condition and the war against inflation has to continue until there is a durable decline in inflation.

The market cheered the RBI's pause as the equity barometer Sensex jumped over 100 points in trade.

Rate-sensitive sectors banking, auto and realty indices traded in the green.

Shares of SBI, Bajaj Finance, IndusInd Bank, Bajaj Finserv and Larsen & Toubro traded among the top gainers in the Sensex index.

“The RBI’s pause is like Sachin's stroke on a tricky pitch but with eyes set in and having the luxury of hitting the ball where ever he wanted. The RBI had the option of a rate hike or a pause. The pause was not entirely unexpected," said Nilesh Shah, MD, Kotak Mahindra Asset Management Company.

"The RBI will watch developments and data before taking the next call. The market expects the RBI to fetch maximum run and win the match on inflation and growth, no matter which direction they hit the ball,” said Shah.

Santosh Meena, Head of Research at Swastika Investmart said the market is in a good mood, and this policy provides us with further cause to rejoice. 

However, given that we have witnessed a good recovery from recent lows and that we have a long weekend and a weekly expiry, some profit-taking or consolidation cannot be ruled out, Meena said, adding that the market's overall tone has changed to positive for the near term. If you have cash then sell, and buy in the future.

"Technically, the crucial resistance levels for Nifty and Bank Nifty are 17,600 and 41,250, respectively. If they successfully cross over these levels, we can anticipate a move toward the 17,770 and 41,650 levels; otherwise, some profit-taking is anticipated. On the downside side, immediate support levels are at 17,440 and 40,650. The texture is the buy-on dip," said Meena.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.

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First Published: 06 Apr 2023, 10:34 AM IST