The Indian stock market witnessed sharp swings in Wednesday’s trade, with stocks retreating from their opening gains and slipping into deep losses towards the close after the RBI raised interest rates by an expected 25 basis points amid persistent inflationary pressures and strong economic growth.
Equities opened higher and extended their two-day winning run, but a sharp reversal in financials and autos, along with heavy selling in metals, dragged the frontline indices lower, wiping out much of their recent gains. The RBI was the latest central bank to raise interest rates, joining the US Federal Reserve, Bank of Japan and European Central Bank, as the ongoing crisis in the Middle East has triggered inflationary pressures, squeezed purchasing power and weighed on currencies.
In addition, domestic conditions also remained weak, with poor monsoon rains linked to El Niño compounding price pressures in Asia’s third-largest economy. Indian stock market today The Nifty 50 closed 0.70% lower at 22,615, while the Sensex finished at 72,648, down 0.57% from Tuesday’s close.
Both indices resumed their losing run following a two-day relief rally. The broader markets, however, closed mixed, with the Nifty Midcap 100 index falling 0.61%, while the Nifty Smallcap 100 index advanced 0.38%. All major sectoral indices ended in the red, with metals bearing the brunt of the selling, followed by realty, auto, consumer durables, technology and FMCG.
On the flip side, PSU banks and media finished higher. Meanwhile, tensions have escalated in West Asia, as Iran stepped up its attacks on vessels in the Strait of Hormuz. This dampened optimism just as shipments through the waterway were approaching pre-war levels, pushing Brent crude towards $101 a barrel.
The US 10-year Treasury yield topped 5.30% as Tuesday’s rebound fizzled out, while the dollar resumed its gains amid rising yields and safe-haven demand. Global markets remain unsettled as energy prices and inflation expectations keep yields near multi-decade highs.
(more to come)