The market benchmarks traded lower on Wednesday after the Monetary Policy Committee (MPC) hiked repo rate by 25 basis points to 5.5 percent.
At around 9:30 a.m., the Sensex was down 398.96 points or 0.55 percent at 72,668.85, while the broader Nifty declined to 22,620.15, down 155.95 points or 0.7 percent.
1) Rate hike worries: The Reserve Bank of India is widely expected to raise rates by 25 basis points, its first increase since February 2023, with Governor Sanjay Malhotra's comments on inflation risks to be closely watched by investors for signals on the future rate path.
A potential rate hike would pressure non-bank lenders' margins as funding costs reprice faster than loan yields, especially for fixed-rate vehicle and microfinance lenders, while floating-rate housing financiers are relatively better positioned, JM Financial said.
2) Rise in brent crude prices: Brent crude rose about 1% to $101.5 as storm risks to US oil output and Houthi attacks on Saudi Arabia outweighed increased Middle East supply.