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Financial, auto stocks drag Sensex lower after RBI raises repo rate
Photo Credit: Reuters

Indian shares shed early gains to end lower on Wednesday, pulled down by financial and auto stocks, after the Reserve Bank of India raised interest rates for the second straight meeting.

The RBI’s Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 6.50 percent. It is the first time since October 2013 that the rate has been increased at consecutive policy meetings.

The reverse repo rate was also raised by 25 basis points to 6.25 percent.

The benchmark BSE index snapped an eight-session winning streak to end 0.23 percent lower at 37,521.62.

The broader NSE Nifty closed 0.09 percent lower at 11,346.2. It had hit an all-time high of 11,390.55 earlier in the session.

Bond markets took comfort from the less-hawkish statement with bond yields easing sharply from the day’s high, while the rupee trimmed gains.

The 10-year benchmark bond yield dropped to 7.74 percent, after briefly rising to 7.84 percent soon after the RBI decision. In the previous session, it ended at 7.77 percent.

The Indian rupee was at 68.51 to the dollar, firmer than Tuesday’s close of 68.55, but off the day’s high of 68.48.

Shares of Housing Development Finance Corp were the biggest drag on the NSE index, closing down 1.18 percent, while Maruti Suzuki Ltd was the top loser among the auto companies, ending 2.03 percent lower.

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