Sensex fell 724 points on Thursday, while Nifty tumbled below 21,750 levels with rate-sensitive banks and auto stocks leading the downside after the Reserve Bank of India (RBI) kept interest rate unchanged, as was expected, but fell short of keeping a dovish tone.

The 30-share BSE benchmark Sensex plunged 1% to settle at 71,428. The broader NSE Nifty fell 212 points or 0.97% to end at 21,718.

The Reserve Bank of India on Thursday left the repo rate unchanged at 6.50% following the conclusion of its three-day monetary policy meeting. This is the sixth consecutive time the central bank has left policy rates untouched and the longest pause in rates since 2008 in a rising interest rate environment.

While maintaining its withdrawal of accommodation stance, RBI Governor Shaktikanta Das also highlighted that the inflation rate was persistently high, above the RBI’s comfort range of 4%.

From the Sensex stocks, ITC, Kotak Bank, ICICI Bank, and Nestle India were the top laggards, falling 3-4%. While SBI, Power Grid, TCS, HCL Tech, and Reliance Industries closed higher.

Meanwhile, shares of the crisis-ridden One 97 Communications, which runs Paytm, closed in 10% lower circuit following fresh comments from RBI officials that the action against Paytm was taken after persistent non-compliance.Rate-sensitive sectors like banking, finance, realty and auto closed in deep red after the RBI’s policy decision. However, Nifty IT, Media, Healthcare, and Oil & Gas closed higher.

Expert Views

“Though FY25 GDP growth forecast has improved, the RBI remains vigilant on inflation & banking liquidity. The incomplete transmission of the cumulative 250 bps and the inflation ruling above the target level add uncertainty about the timing of the interest rate reduction. The ripple effect was seen in the government 10-year yield, which inched higher,” said Vinod Nair, head of research at Geojit Financial Services.

A large pocket of the market slid into the red like FMCG, banks, and auto. FMCG got higher impacted by weak Q3 result and downgrade in volume growth, in the near-term, due to weak rural demand, Nair said.

Aditya Gaggar, director of Progressive Shares, said, “On the daily chart, the index has made a big negative candle but defended the level of 21,700 as well as 21DMA support, which can be considered as immediate support while the upside seems to be capped at 21,900. In case of a decisive breakdown, the correction may extend to 21,500 while on the higher side, a convincing close above 22,100 is a must for resuming its uptrend.”

Global Markets

World stocks were flying high on Thursday as China’s recent slew of support measures, and reassurances that Japan’s interest rates will not shoot up, kept the bulls in charge following record peaks on Wall Street.

In Asia, Japan’s Nikkei had surged 2.1% to close at its highest level in 34 years, helped by the BOJ comments and a 10% leap in SoftBank shares after key holding Arm, which designs microchips, lifted profit forecasts. Hong Kong’s Hang Seng was down 1.3%.

Oil Rises

Oil extended gains on Thursday after Israel rejected a ceasefire offer from Hamas, while a weaker dollar also supported prices. Brent crude futures rose 57 cents, or 0.71%, at $79.77 a barrel. US West Texas Intermediate crude futures climbed 47 cents, or 0.64% to $74.35 a barrel.

Currency Watch

The Indian rupee ended little changed on Thursday after the Reserve Bank of India kept its benchmark policy rates unchanged, with the focus now on US economic data and remarks from a Federal Reserve official due later in the day.
The rupee ended at 82.9550 against the dollar, barely changing from its close at 82.9675 in the previous session.

The dollar index hovered near the 104 handle, while Asian currencies were mostly rangebound.

(With inputs from agencies)

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