Equity benchmarks snapped a two-session winning streak on Wednesday as the raised the , a hawkish pivot that rattled rate-sensitive sectors and dragged both headline indices lower.
“…sentiment softened as investors weighed the higher inflation outlook and shift to a calibrated tightening stance, keeping the broader market mood cautious,” said Ajit Mishra, SVP – Research, Religare Broking.
The 50 closed at 22,603.05, down 173 points or 0.76 per cent, while the BSE settled at 72,638.70, a loss of 429 points or 0.59 per cent. The Sensex opened at 72,965.38, hit an intraday high of 73,018.82, before slipping to a low of 72,468.72. Bank Nifty closed around 55,000, largely flat but under pressure through the session.
Alongside the rate action, the RBI revised its FY27 GDP growth forecast upward by 40 basis points to 7.1 per cent and raised its inflation projection to 5.2 per cent. The central bank flagged concerns over second-round inflationary effects, supply chain disruptions, deficient monsoons, and elevated global commodity prices. “The RBI hiking FY27 GDP growth by 40bps to 7.1 per cent reflects the strength and resilience of the Indian economy,” said Rajiv Sabharwal, MD and CEO, Tata Capital, adding that a healthy investment outlook and sound financial sector fundamentals provide confidence that the credit cycle will remain intact.
On the sectoral front, metals bore the steepest losses, with the metal index shedding over 2.35 per cent. Realty, auto, consumer durables, and IT also remained under pressure. PSU Banks and media were among the few outperformers. The broader market was mixed, the Nifty Midcap 100 declined 0.63 per cent, while the Nifty Smallcap 100 managed a gain of 0.30 per cent.
The rupee weakened in tandem with equities. USDINR touched 96.85 during the session, logging its second weakest close and trailing most Asian peers. “A rebound in crude oil prices and a wave of risk aversion added pressure, leaving dollar bulls firmly in control,” said Dilip Parmar, Senior Research Analyst, HDFC Securities, who sees near-term resistance at 96.97 and support at 96.30. Brent crude climbed back above $101 a barrel, compounding the cautious sentiment, while continued foreign institutional outflows and elevated global bond yields added further headwinds.
Looking ahead, analysts broadly expect the tightening cycle to remain shallow. “We see [a] shallow rate hike cycle of another 50bps over [the] next 6 months,” said Kaustubh Gupta, CIO – Fixed Income, Aditya Birla Sun Life AMC, citing the global macro backdrop. CareEdge Ratings’ Chief Economist Rajani Sinha also pencilled in another 25–50 basis points of hikes, but noted that headline inflation is expected to moderate from Q4 FY27. For the near term, 22,700 on the Nifty and 73,000 on the Sensex remain the key resistance levels, a sustained close above either would be the first signal that market sentiment is beginning to stabilise.