BENGALURU: Indian shares ended lower in a volatile session on Thursday as investors booked profits after the central bank held interest rates steady, as expected, and maintained its hawkish policy stance due to stubbornly high food inflation.
The NSE Nifty 50 index was down 0.74% at 24,117, and the S&P BSE Sensex fell 0.73% to 78,886.22.
The Reserve Bank of India (RBI) kept rates unchanged for a ninth straight meeting, with Governor Shaktikanta Das warning against complacency because of falling core inflation.
The RBI has kept interest rates unchanged since February 2023. The Nifty has surged about 36% during this period on strong economic growth, corporate earnings and surplus liquidity. However, equity benchmarks have succumbed to bouts of profit-taking as they trade near record highs.
“The recent market turmoil did not move the needle for the monetary policy committee today as it continued to strike a hawkish tone,” said Shilan Shah, deputy chief emerging markets economist at Capital Economics.
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With concerns over a U.S. recession and high valuations in domestic equities, there could be further profit-booking near current levels, analysts said.
The benchmarks fell about 0.3% ahead of the RBI’s meeting. The losses steepened to 0.6% right after the decision, before markets briefly erased them by noon. Profit booking, however, set in soon after, with the Nifty and Sensex closing near session lows.
Eight of 13 major sectors logged losses. IT companies , which earn a chunk of their revenue from the U.S., fell 1.9%, the steepest drop among major sectors, ahead of labour market data due on Thursday.
Weaker-than-expected U.S. jobs data could add to worries of a recession in the world’s largest economy and weigh on global equity markets, analysts said.
HDFC Bank, the heaviest weighted stock on the Nifty 50, rose about 1.2%, after brokerages said the private lender had an edge over peers in terms of retail asset quality.
Meanwhile, the RBI cautioned banks against high growth in certain segments of retail loans, urging them to monitor the quality of the loans to avoid systemic risks.
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