Sensex and Nifty Dip Amid RBI's Unchanged Policy Rate

The Sensex and Nifty closed nearly 1% down due to the RBI's decision to keep the policy rate unchanged for the ninth straight meeting amid stubborn food inflation. Sensex fell 581.79 points to 78,886.22 and Nifty dropped 180.50 points to 24,117. Investors remain cautious as RBI awaits cues from the US Federal Reserve.

Equity benchmark indices Sensex and Nifty closed nearly 1 percent down on Thursday after the Reserve Bank of India decided to keep the policy rate unchanged for the ninth time in a row, citing stubborn food inflation.

The 30-share BSE Sensex declined by 581.79 points, or 0.73 percent, to settle at 78,886.22 in a volatile trade. Throughout the day, it experienced a sharper drop of 669.07 points, or 0.84 percent, to hit 78,798.94.

Similarly, the NSE Nifty retreated to close lower by 180.50 points, or 0.74 percent, at 24,117. During the day, it tanked 217.8 points, or 0.89 percent, to reach 24,079.70.

The Reserve Bank of India kept the benchmark interest rate and stance unchanged for the ninth consecutive policy meeting, stating it cannot afford to overlook the persisting high food inflation and must remain vigilant to preempt spillover effects.

The Monetary Policy Committee (MPC) maintained the benchmark repurchase rate at 6.50 percent. The committee, whose four-year term concludes in October, also kept its policy stance at "withdrawal of accommodation," aiming to steer inflation towards its 4 percent target.

Inflation in June rose to 5.08 percent, mainly driven by food prices. RBI Governor Shaktikanta Das remarked that food inflation remains "stubbornly" high.

''RBI MPC is in a wait-and-watch mode and has kept the interest rates unchanged, awaiting cues from the US Federal Reserve before making any moves. Stock markets will continue to consolidate in the interim,'' said Umeshkumar Mehta, CIO of SAMCO Mutual Fund.

Among the 30 Sensex firms, the biggest laggards were Asian Paints, Infosys, JSW Steel, UltraTech Cement, Power Grid, Larsen & Toubro, HCL Technologies, and Tata Steel. On the other hand, Tata Motors, HDFC Bank, Bharti Airtel, ITC, IndusInd Bank, and Axis Bank ended as gainers.

In Asian markets, Shanghai and Hong Kong closed higher, while Seoul and Tokyo ended lower. European markets were trading negatively, and US markets had closed lower on Wednesday.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,314.76 crore on Wednesday, according to exchange data. The global oil benchmark, Brent crude, declined by 0.66 percent to USD 77.83 a barrel.

On Wednesday, the BSE benchmark had rallied 874.94 points, or 1.11 percent, to settle at 79,468.01, with an intraday surge to 1,046.13 points, or 1.33 percent, to hit 79,639.20. The NSE Nifty jumped 304.95 points, or 1.27 percent, to 24,297.50, with an intraday surge of 345.15 points, or 1.43 percent, to 24,337.70.

(With inputs from agencies.)