The Indian stock market witnessed sharp swings in Wednesday’s trade, with stocks retreating from their opening gains and slipping into deep losses towards the close after the RBI raised interest rates by an expected 25 basis points amid persistent inflationary pressures and strong economic growth.
Equities opened higher and extended their two-day winning run, but a sharp reversal in financials and autos, along with heavy selling in metals, dragged the frontline indices lower, wiping out much of their recent gains.
The RBI was the latest central bank to raise interest rates, joining the US Federal Reserve, Bank of Japan and European Central Bank, as the ongoing crisis in the Middle East has triggered inflationary pressures, squeezed purchasing power and weighed on currencies.
In addition, domestic conditions also remained weak, with poor monsoon rains linked to El Niño compounding price pressures in Asia’s third-largest economy.
The Nifty 50 closed 0.70% lower at 22,615, while the Sensex finished at 72,648, down 0.57% from Tuesday’s close. Both indices resumed their losing run following a two-day relief rally.