RBI repo rate hike impact on share market: Nifty Bank, Financial Services stocks gain - IDFC First Bank top gainer

Expecting a rate hike in the August monetary policy, the rate-sensitive sectors and stocks were in the green on Friday. Precisely, Nifty Bank and Financial Service surged by over 0.7 and 0.6 per cent, respectively, minutes after the Reserve Bank of India (RBI) Governor announced to hike the key interest rate by 50 basis points. One basis point is one-hundredth of a percentage point.

Das while announcing that the Monetary Policy Committee (MPC) unanimously decided to hike the repo rate to 5.4 per cent, the third consecutive hike amid skyrocketing inflation, said that MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.

Stocks like ICICI Pru Life gained over 3 per cent, followed by Chola Investment and Muthoot Finance up nearly 3 per cent from the financials pack gained most, while IDFC First Bank became top gainer on Nifty Bank, up over 2 per cent, followed by ICICI Bank up over 1.5 per cent on the NSE intraday. 

Heavyweights such as State Bank of India (SBI) and HDFC Life also surged over 1 per cent on the NSE intraday among financial stocks. While Bajaj Finance, HDFC Bank, and HDFC AMC were marginally up. 

In comparison, the Nifty50 index was up almost 58 points or 0.33 per cent to 17439.7 levels and the Sensex was up over 255 points or 0.44 per cent to 58,554.27 at around 11:00 AM on Friday.  

Several analysts had predicted that the RBI’s MPC is likely to hike the key interest rates in the range of 35 to 50 basis points (bps) with less hawkish commentary during the August bi-monthly policy. 

Notably, June marked the sixth straight month when inflation came at 7.01 per cent, higher than the upper tolerance level of RBI.