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Nifty witnesses sharp fall after RBI keeps repo rate unchanged

08 Aug 2024 Evaluate

Indian equity benchmark -- Nifty -- ended Thursday’s trading session with over half percent cut amid Reserve Bank of India (RBI) kept repo rate unchanged. Index made a negative start, as foreign fund outflows weighed on the sentiments. According to exchange data, foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 3,314.76 crore. Traders took a note of 16th Finance Commission chairman Arvind Panagariya’s statement that India needs to open its economy further, privatise banks and introduce factor market reforms to lift its growth beyond 6.5-7% levels.  

In afternoon session, index trimmed most of its losses, but failed to hold its position and slipped into deep red, as the Reserve Bank of India's monetary policy committee (MPC) kept the repo rate unchanged at 6.5 per cent for the ninth time in a row. The central bank maintained its hawkish stance due to persistently high food inflation. The RBI also keeps the gross domestic product (GDP) growth projection unchanged at 7.2 per cent for the financial year 2024-25 (FY25). Traders overlooked Reserve Bank Governor Shaktikanta Das’ statement that India’s forex reserves have touched a record level of $675 billion on August 2. The new record surpasses the previous high of $670.857 billion set on July 19, with the last reported figure standing at $667.386 billion as of July 26. Furthermore, he said “current account deficit to remain imminently manageable during this fiscal”. Finally, index magnified its losses to end near day’s low point.

Traders were seen piling up positions in Pharma, Media and Financial Services stocks, while selling was witnessed in IT, Metal, and Oil & Gas. The top gainers from the F&O segment were MRF, Alkem Laboratories and Lupin. On the other hand, the top losers Piramal Enterprises, LTIMindtree and National Aluminium Company. In the index option segment, maximum OI continues to be seen in the 24900 - 25100 calls and 23900 - 24100 puts indicating this is the trading range expectation.

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