{
  "type": "article",
  "title": "Dalal Street Rebounds From Day's Lows Despite Fresh RBI Interest Rate Hike",
  "summary": "Benchmark indices Sensex and Nifty staged a recovery from sharp intraday declines even as the Reserve Bank raised the repo rate by 25 basis points.",
  "content": "Dalal Street staged a noticeable comeback from day's lows after the Reserve Bank delivered an interest rate increase, defying expectations of an extended selloff. Benchmark indices had dropped sharply ahead of the policy details, with the Sensex sliding more than 450 points as Reserve Bank Governor Sanjay Malhotra started his policy speech. However, market participants quickly stepped in to buy once the decision was announced, rather than pulling capital out of equities. Market observers noted that the rate decision had largely been factored into stock valuations beforehand, preventing deeper cuts and keeping aggressive sellers in check.\n\nBenchmark Indices Pare Losses\nThe Sensex had fallen to an intraday trough of 72,520.73 as the central bank chief took the stage to announce the decisions of the Monetary Policy Committee. Bouncing back from that floor, the 30-share gauge traded at 72,773.12, reflecting a drop of 294.69 points or 0.40 percent. The broader 50-share Nifty followed an identical trajectory, rebounding from an intraday low of 22,578.25 to trade at 22,648.05, representing a decline of 128.05 points or 0.6 percent.\n\nLenders Lead Support While Rate-Sensitive Sectors Slide\nThe stabilization in headline indices was driven primarily by banking counters. Kotak Bank led the gains with an advance of 2 percent, while Bajaj Finance, SBI, and Axis Bank figured prominently among top performers on the Sensex. Despite the resilience in financials, broader market momentum was capped by intense selling across gold, defence, automobile, and metals counters.\n\nTitan plunged 4 percent, while Bharat Electronics slipped 2 percent. Asian Paints fell 1.5 percent, and automobile majors faced selling pressure as M&M dropped 1.5 percent and Maruti Suzuki slipped 1 percent. Other rate-sensitive counters also saw sustained pressure, with Ultratech Cement and Tata Steel declining by more than 1 percent each.\n\nSectoral Indices Paint a Mixed Picture\nSector-specific performance reflected divergence across the board. The Nifty Bank held steady around 55,153.00, whereas the Nifty Financial Services index eased to trade near 24,898. In the broader market space, the Nifty Smallcap 100 posted gains, while Nifty Midcap indices witnessed selling pressure.\n\nAmong sectoral gauges, Nifty Auto retreated 1.5 percent to hover near 25,163.10, and Nifty Metal matched that move with a 1.5 percent drop to 12,411.70. Nifty FMCG and Nifty Realty recorded losses of 1 percent each. Conversely, both public and private banking gauges traded higher, with Nifty PSU Bank and Nifty Private Bank recording positive movement.\n\nMarket Strategists Analyze Policy Impact\nDr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, pointed out that the central bank's move had already been absorbed by market participants. He noted that while a 25 basis point hike in policy rates was widely anticipated and factored in, the market had not completely priced in the monetary stance and the central bank's perspective on growth versus inflation. Consequently, trading reactions were dictated primarily by the Governor's observations regarding the evolving economic backdrop.\n\nChoice International CEO Arun Poddar remarked that the policy shift represented a calibrated reaction to inflation risks amid steady economic growth. The updated stance also highlighted that policymakers remain vigilant regarding domestic and external headwinds, especially swings in crude prices and their inflationary consequences. Poddar explained that while financial conditions could see short-term tightening, underlying growth fundamentals across the country remain strong. He added that market attention will now hinge on inflation readings, liquidity levels, and the trajectory of interest rates, with the central bank's data-driven path serving as a key anchor for stability.\n\nPolicy Rate Adjustments and Stance Shift\nFollowing a comprehensive assessment, the Reserve Bank increased the policy repo rate by 25 basis points, moving it to 5.50 percent from 5.25 percent. The standing deposit facility rate was subsequently adjusted to 5.25 percent, while the marginal standing facility rate and the Bank Rate were revised to 5.75 percent. The Monetary Policy Committee also altered its policy stance to calibrated tightening, marking the first such shift since October 2018. This revision also marked the first time the Reserve Bank increased interest rates since February 2023.\n\nGlobal Headwinds and Geopolitical Uncertainty\nPolicymakers observed that since the August 2026 Monetary Policy Committee gathering, a renewed escalation of hostilities in West Asia and sharp fluctuations in crude oil prices have created significant uncertainty across international markets. Although global growth has shown resilience, rising price pressures in several major economies have triggered hawkish policy shifts. The US Federal Reserve raised interest rates by 25 basis points in September, and accompanying commentary alongside tightening measures from other central banks reinforced expectations of sustained high rates worldwide.\n\nTighter global financial conditions and concerns over fiscal sustainability in leading economies have pushed global bond yields to historic highs. With no clear resolution in West Asia, key downside risks continue to hang over the world economy, including tighter liquidity, stretched valuations in artificial intelligence assets, and heavy public debt burdens.\n\nGovernor's Macroeconomic Outlook\nThe Reserve Bank Governor stated that the sudden escalation of conflict in West Asia during September and the resulting surge and volatility in crude prices weakened global sentiment and heightened financial market fluctuations. The Governor noted that although international economic growth remains steady, it is projected to slow down in 2026 compared to the prior year.\n\nThe Governor also noted that rising energy expenses and higher food costs are expected to push global inflation upward, driving major central banks to adopt tighter monetary measures. Persistent trade uncertainty, elevated bond yields in developed economies, and a strengthening US dollar continue to weigh on market sentiment. Unresolved conflict in West Asia, ongoing adjustments in financial liquidity, and questions surrounding appropriate valuations for AI shares represent substantial challenges for global economic stability.\n\nWhat this means for you\nThe 25-basis-point repo rate hike directly impacts personal borrowing costs and returns on fixed-income investments.\n\n• Loan Costs: With the repo rate increasing to 5.50 percent, commercial banks are likely to raise interest rates across home, auto, and personal loans. Borrowers should anticipate higher monthly EMI payments or an extension in their overall loan repayment tenure.\n• Fixed Deposits: Central bank tightening typically encourages banks to offer improved returns on deposit schemes. Savers and senior citizens can expect marginally higher interest rates on fresh term deposits.\n• Equity Investors: Rate-sensitive sectors like real estate, auto, and metals may remain under valuation pressure in the near term. Conversely, commercial banks with strong balance sheets could see supported margins.\n• Financial Planning: Prospective borrowers should evaluate repayment bandwidth before committing to major credit purchases under elevated rates. Existing loan holders might explore prepayments to curb expanding interest charges.\n\nWhy this happened\nThe Reserve Bank implemented the rate hike to contain emerging inflationary pressures triggered by geopolitical tensions and surging energy costs.\n\n• Crude Oil Volatility: The re-escalation of hostilities in West Asia in September 2026 fueled sharp swings and higher prices in global oil markets. Rising energy expenses posed direct risks to inflation trajectories across importing economies.\n• Global Monetary Tightening: The US Federal Reserve raised interest rates by 25 basis points in September, alongside tightening steps by other major central banks. These developments kept global bond yields near historic highs and placed upward pressure on global borrowing costs.\n• Policy Stance Shift: The Monetary Policy Committee shifted its stance to calibrated tightening for the first time since October 2018. This move, representing the first rate increase since February 2023, aims to protect macroeconomic stability against evolving shocks.\n\nQuestions & Answers\n\n1. How much did the Reserve Bank increase the repo rate?\nThe Reserve Bank raised the policy repo rate by 25 basis points, moving it from 5.25 percent to 5.50 percent.\n\n2. When did the central bank last hike interest rates before this decision?\nThe Reserve Bank had last increased policy interest rates in February 2023.\n\n3. What change was made to the Monetary Policy Committee's stance?\nThe committee changed its policy stance to calibrated tightening for the first time since October 2018.\n\n4. What are the new rates for SDF and MSF?\nThe standing deposit facility rate was set at 5.25 percent, while the marginal standing facility rate and Bank Rate were adjusted to 5.75 percent.\n\n5. How did benchmark indices react after touching intraday lows?\nThe Sensex recovered to 72,773.12 after hitting a low of 72,520.73, while the Nifty rebounded to 22,648.05 after touching 22,578.25.\n\n6. Which stocks showed the strongest resilience during the session?\nKotak Bank gained 2 percent, while Bajaj Finance, SBI, and Axis Bank ranked among the top performers on the Sensex.",
  "url": "https://trendkia.com/en/market/nitigata-byaja-daron-men-barhotari-ke-bicha-indian-stock-market-men-nichale-staron-se-teja-sudhara-44401",
  "category": "Market",
  "publishedAt": "2026-10-07",
  "tags": [
    "RBI",
    "Sensex",
    "Nifty",
    "Repo Rate",
    "Stock Market",
    "Monetary Policy"
  ],
  "language": "en",
  "site": "TrendKia"
}