RBI rate hike, hawkish stance push Sensex 216 pts down, Nifty below 18,600

Shares of heavyweight

() were the biggest drag on both Sensex and Nifty, ending 1.4% lower at Rs 2,649.9 on the BSE.

Barring FMCG and PSU bank stocks, all sectors ended in the red zone with media and realty counters among top losers. Rate-sensitive Nifty Auto also ended 0.8% lower with

and featuring in the top losers’ pack.

Investors dumped realty and automobile stocks on worries that higher EMI outgo post the RBI’s repo rate hike could dent demand going ahead.

“Although the rate hike came on expected lines, the RBI showing no signs of letting off in its fight against inflation raised concerns that more hikes could be in the offing going ahead, which would hurt growth,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Within the Sensex pack,

, and L&T were among the top gainers, rallying between 1.5 and 2% each. On the other hand, , , and RIL were among the top drags.

The weakness was evident across segments as Nifty Smallcap250 ended 0.39% lower and Nifty Midcap100 lost 0.58% of its value.

PSU banks, however, defied the grim mood on Dalal Street as at least six stocks from the pack hit fresh 52-week highs during the day.

Analysts said RBI’s focus remains on fighting inflation, which will lead to increase in interest rates in future. “Along with a global slowdown, corporate earnings forecasts for H2FY23 & FY24 can downgrade. The market is currently trading at premium valuations, a slowing earnings growth will impact market sentiment,” said Vinod Nair, Head of Research at

.

Technical analysts said as long as the index is trading below 18,650, the correction wave is likely to continue. In the meantime, the rupee gained 3 paise to close at 82.47 against the US dollar.

Equities in most emerging Asian markets fell on fears of impact on global economic growth from aggressive US Fed rate hikes.