RBI Maintains Status Quo, Sensex Closes Higher Amid Economic Growth Forecast Upgrade

The Reserve Bank of India (RBI) has opted to keep its key policy rates unchanged for the fourth consecutive time, maintaining the repo rate at 5.25 per cent, leading to a volatile but ultimately positive close for the BSE Sensex, which gained 152 points.

RBI Maintains Status Quo, Sensex Closes Higher

The 30-share BSE Sensex rose by 152.05 points, or 0.19 per cent, to end at 78,581 with 17 of its constituents closing with gains, 12 with losses and one unchanged.

The index opened higher and hit a day’s high of 79,055.38 in the first half of the session. However, the index slipped into the red in the late afternoon session, hitting a low of 78,285.74 by losing 769.64 points.

Key Policy Rate Remains Unchanged

The six-member Monetary Policy Committee, headed by Governor Sanjay Malhotra, unanimously voted to keep the policy repo rate unchanged at 5.25 per cent and retained its “neutral” policy stance.

Market Performance and RBI’s Stance

• The 50-share NSE Nifty edged up 9.75 points, or 0.04 per cent, to end at 24,624.65.
• The indices have been facing wide divergence since Monday after stock exchanges introduced a new auction mechanism for shares having futures and options (F&O) contracts.
• The Closing Auction Session (CAS) in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.

Key Takeaways

• The RBI maintained the policy repo rate at 5.25 per cent for the fourth consecutive time.
• The BSE Sensex closed 152 points higher at 78,581.
• The RBI marginally upgraded India’s economic growth forecast for the current financial year to 6.7 per cent.

FAQs

What is the RBI’s stance on policy rates?

The RBI has maintained the policy repo rate at 5.25 per cent for the fourth consecutive time, citing a resilient domestic economy.

What is the impact of the Closing Auction Session (CAS) on the market?

The CAS has introduced a new auction-based mechanism for determining the closing prices of eligible stocks, aimed at making the price discovery process more transparent and robust.

What is the economic growth forecast for the current financial year?

The RBI has marginally upgraded India’s economic growth forecast for the current financial year to 6.7 per cent.

Conclusion

The RBI’s decision to maintain the policy repo rate at 5.25 per cent has led to a volatile but ultimately positive close for the BSE Sensex, which gained 152 points. The market is expected to remain cautious amid lingering uncertainty over a lasting resolution to the Middle East conflict. Investors are advised to stay informed and adjust their portfolios accordingly.