RBI rate hike decision uplifts equity investors' mood

Mumbai: The Indian central bank's decision to hike repo rate by 25 basis points on Wednesday has boosted investors' sentiments leading the key Indian equity indices surge during afternoon session trading on Thursday.

The 30-scrip Sensitive Index (Sensex) was trading 373.04 points or 1.06 per cent higher.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 110.95 points or 1.04 per cent higher at 10,795.60 points.

The Sensex of the BSE, which opened at 35,278.38 points, traded at 35,551.92 points (at 12.52 p.m.), 373.04 points or 1.06 per cent higher from the previous day's close at 35,178.88 points.

The Sensex touched a high of 35,575.28 points and a low of 35,278.38 points in the trade so far.

Following a cycle of rate cuts begun in January 2015, the RBI on Wednesday raised its key interest rate for the first time by 25 basis points to 6.25 per cent.

"Indian equity markets opened in positive mood and are trading higher after the Monetary Policy Committee hiked repo rates by 25 bps to 6.25%, for the first time in four years, while maintaining a neutral stance," said Dhruv Desai, Director and Chief Operating Officer at Tradebulls.

"The reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent," the RBI said.

"The decision of the Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent," it added.