The BSE Sensex and NSE Nifty erased all early gains as the Reserve Bank of India (RBI) disappointed the street by keeping repo rate and cash reserve ratio unchanged in its mid-quarter policy review on Monday.
Traders wound up long positions that had been created in last two weeks on hopes that the central bank may cut repo rate or cash reserve ratio by 25 basis points at least.
The BSE benchmark fell 143.55 points or 0.85% to 16806.28 and the NSE benchmark lost 48.85 points to 5,090.
Even the Indian rupee depreciated by 18 paise to 55.57 as against the US dollar. 8.15% 10-year bond yields spiked 1.11% to 8.14.
In its statement, the RBI says, global macro and financial conditions have been deteriorated since April. Even domestic macro situation raises deepening concerns.
Retail inflation is on uptrend, so cut in policy rates now could exacerbate inflation, the RBI says. Inflation for May increased to 7.55% from 7.23% in April.
Central bank has hiked Export Credit |
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