Stock Market Update: The mildly hawkish monetary policy of the Reserve Bank of India exacerbated profit taking on Dalal Street on Wednesday. As it continued to be wary of a sticky core inflation in the midst of the upheaval across the world, the central bank raised the repo rate by 35 basis points and reduced its prediction for the growth of the gross domestic product (GDP) for FY23 from 6.9% to 6.8%.
The monetary policy committee (MPC) maintained its 6.7% inflation prediction for the current fiscal year, according to Governor Shaktikanta Das. It has, however, slightly increased its projections for both the current quarter and the following quarter.
Stock Market Update: By Shaktikanta Das
“There are greater uncertainty surrounding the medium-term inflation target. To keep inflation expectations anchored, end core inflation persistence, and limit second-round consequences, additional calibrated monetary policy action is necessary “added Das.
This caused the benchmark S&P BSE Sensex index to drop 216 points, or 0.34 percent, to 62,411 due to this and global weakness. The Nifty50 also finished below the 18,600-point threshold at 18,560.5, down 82 points or 0.4%.
MidCap and SmallCap indices declined
The BSE MidCap and SmallCap indices declined along with the frontline indices and dropped about 0.4% each in the larger market.
Following remarks made by Reserve Bank of India governor Shaktikanta Das that the economy appears to have picked up steam heading into the October-December quarter of the fiscal year 2022–23 (Q3FY23), the Nifty FMCG index ended the day 0.96 percent higher.
Aside from that, the Nifty PSU Bank index also increased at the end of the day after the RBI extended the distribution of an enhanced limit of the held-to-maturity (HTM) portfolio for government bonds until March 31 of the following year. This allowed banks to manage their investment portfolios more effectively.
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