Sensex sheds 216 pts post RBI rate hike; RIL top drag

MUMBAI: The BSE Sensex tumbled for the fourth session on the trot on Wednesday after the Reserve Bank raised the key interest rate by 35 basis points and lowered the country's GDP growth forecast to 6.8 per cent for the current fiscal due to continued geopolitical tensions and tightening of global financial conditions.

The central bank also said it remains focussed on bringing down inflation that has stayed above the comfort zone for 10 straight months.

Subdued Asian markets and continued selling by foreign investors further weighed on investor sentiment, traders said.

The 30-share BSE benchmark ended 215.68 points or 0.34 per cent lower at 62,410.68. Similarly, the broader Nifty fell 82.25 points or 0.44 per cent to 18,560.50.

NTPC was the top loser in the Sensex pack, shedding 2 per cent, followed by Bajaj Finserv, IndusInd Bank, Tata Steel, Reliance Industries, Sun Pharma, HCL Tech and Wipro.

On the other hand, Asian Paints, HUL, L&T, Axis Bank, ITC and M&M were among the gainers, climbing up to 2.10 per cent.

''As the economy deals with the global headwinds, the RBI has become more realistic, lowering FY23 GDP growth forecast from 7 per cent to 6.8 per cent. The focus remains on fighting inflation which will lead to increase in interest rates in future.

''Along with a global slowdown, corporate earnings forecast for H2FY23 and FY24 can be downgraded. The market is currently trading at premium valuations... a slowing earnings growth will impact market sentiment,'' said Vinod Nair, Head of Research at Geojit Financial Services.

Sector-wise, interest rate sensitive BSE realty, consumer durables and auto indices closed up to 1.11 per cent lower.

The Reserve Bank on Wednesday expectedly raised the benchmark lending rate by 35 basis points (bps) -- the fifth increase since May -- saying it remains focussed on bringing down the inflation to a tolerable limit.

Terming the Indian economy a bright spot in the otherwise gloomy world, the Reserve Bank of India (RBI) lowered its estimate of GDP growth to 6.8 per cent in the fiscal ending March 31, 2023, from an earlier forecast of 7 per cent.

It, however, kept the inflation forecast unchanged at 6.7 per cent for the current fiscal and projected it to come below the upper tolerance limit of 6 per cent in the fourth quarter of the current financial year.

The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 6.7 per cent in October. Retail inflation has been ruling above the RBI's comfort level of 6 per cent since January this year.

RBI Governor Shaktikanta Das said the central bank remains nimble and flexible in its approach to deal with the price situation.

Ajit Mishra, VP - Technical Research, Religare Broking Ltd, said, ''Markets have been gradually drifting lower, however rotational buying in index majors across sectors is capping the damage. Feeble global cues might continue to put pressure... In the current scenario, traders should focus on trade management and prefer sectors that are showing resilience for fresh buying.'' In the broader markets, BSE smallcap and midcap indices lost up to 0.44 per cent.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, Seoul and Tokyo ended with significant losses.

Stock exchanges in Europe were trading with gains in mid-session deals.

Meanwhile, international oil benchmark Brent crude declined 1.56 per cent to USD 78.11 per barrel.

The rupee pared initial losses and settled marginally higher at 82.47 (provisional) against the US dollar.

Foreign Institutional Investors (FIIs) were net sellers in capital markets as they offloaded shares worth Rs 635.35 crore on Tuesday, according to exchange data.