Indian equities extended their sharp decline as the Reserve Bank of India implemented a rate hike and shifted to a tighter policy stance, with benchmark indices hitting fresh lows amid surging crude oil prices and heavy foreign fund outflows.

Indian equities extended their sharp decline as the Reserve Bank of India implemented a rate hike and shifted to a tighter policy stance, with benchmark indices hitting fresh lows amid surging crude oil prices and heavy foreign fund outflows.

Indian equities extended their sharp decline as the Reserve Bank of India implemented a rate hike and shifted to a tighter policy stance, with benchmark indices hitting fresh lows amid surging crude oil prices and heavy foreign fund outflows.

Indian equities extended their slide on Thursday as the Reserve Bank of India’s rate hike and a shift to a tighter policy stance continued to weigh on sentiment, with benchmarks hitting fresh afternoon lows amid surging crude oil prices and foreign fund outflows.

The Sensex touched 71,406.79 in the afternoon session, down about 1,232 points from Wednesday’s close and roughly 1,661 points below Tuesday’s level.

The Nifty slid to 22,190, losing around 413 points versus Wednesday and nearly 586 points compared with Tuesday.

Both indices saw the two-day drubbing after the Monetary Policy Committee (MPC) announcement.

RBI’s hawkish turn and oil spike drive the sell-off

The RBI on Wednesday raised its benchmark repo rate by 25 basis points to 5.50 per cent, its first hike in nearly four years, and shifted its policy stance to “calibrated tightening” from “neutral”, signalling that rate cuts are off the table and that further increases could follow if inflation and the rupee remain under pressure.

That hawkish pivot, combined with Brent crude’s jump of over 2 per cent to above 102 dollars a barrel on Middle East supply worries, left investors cautious about both domestic financial conditions and global risk appetite.

Fourteen of the 16 major sectoral indices ended in the red, with broader small-caps and mid-caps each falling about 0.8 per cent, reflecting a broad-based risk-off mood.

The IT sector was a notable outlier, with Tech Mahindra and Infosys being the only green flags in the 30-pack BSE benchmark index. TCS gained 2.5 per cent in the morning ahead of its September-quarter results, but the afternoon dip pushed it below 1 per cent.

FII outflows and payment-stock jitters

Foreign institutional investors remained net sellers, offloading equities worth ₹6,121.37 crore on Wednesday, according to exchange data, adding to the pressure on benchmarks as global cues stayed mixed and US Treasury yields hovered at elevated levels.

Analysts and market watchers are of the opinion that tighter domestic financial conditions, persistent FII selling and uncertain global cues were likely to keep markets subdued until a clearer directional catalyst emerges from the ongoing quarterly results season.

Payment and fintech names came under particular pressure after reports that the planned 15 October rollout of merchant fees on certain digital-payment transactions could be delayed by a few months.

Paytm and One Mobikwik each tumbled 7 per cent, while Pine Labs fell 3.1 per cent on the back of those reports. ITC slipped 4.5 per cent, becoming the biggest Sensex loser. Other major laggards were IndiGo, BEL, Adani Ports, and Powergrid.

With the RBI now in a tightening mode and oil prices hovering near three-digit levels, market participants expect volatility to persist, with quarterly earnings and global macro data likely to dictate the next leg of direction for Indian equities.

TAGS