Stock market benchmarks, the Sensex and the Nifty 50, suffered significant losses in morning trade on Wednesday, 7 October, ahead of the RBI monetary policy outcome. The Sensex crashed nearly 500 points, or 0.65%, to an intraday low of 72,591, while the NSE counterpart Nifty 50 crashed nearly 0.80% to 22,600 during the session. The BSE 150 Midcap and BSE 250 Smallcap indices also declined by up to half a per cent.
HDFC Bank, Titan, ICICI Bank, Reliance, and Axis Bank were among the top drags on the Sensex around 9:30 am.
Let's take a look at three key factors behind the fall in the Indian stock market:
The market witnessed a selloff ahead of the RBI policy decision. The central bank is expected to raise the repo rate by 25 basis points. While a rate hike could be discounted, the market appears nervous about the prospects of a hawkish RBI, potentially signalling further rate hikes. A revision of growth and inflation estimates will also be key monitorables.
"The focus of the market attention today will be on the monetary stance and the message from the RBI Governor. A 25 bp hike in policy rates is inevitable and already discounted by the market. What is not discounted is the monetary stance and the central bank’s view on the emerging growth-inflation dynamics. Therefore, the market’s response to the policy would be influenced by the Governor’s comments on the emerging scenario," said V K Vijayakumar, Chief Investment Strategist, Geojit Investments.