RBI Repo Rate Hike: Wednesday turned out to be a roller coaster ride for investors in the stock market. In the morning, after receiving the news of the Reserve Bank’s decision, the market saw a sharp decline. The Sensex fell by 547 points and the Nifty also saw a big slip.

At one point during the trading, the Sensex fell to a level of 72,520.73 and the Nifty also touched a low of 22,578.25. But this was followed by a good buy back at lower levels. Sensex improved to 72,969.57 and Nifty also touched 22,701.6. Around 11:30 am, the Nifty was seen trading at 22,682 and the Sensex at 72,904.

Behind this stability of the market was the great prediction of the Reserve Bank. The central bank has raised the country’s economic growth rate, i.e. GDP growth estimate for FY2027, by 40 basis points to 7.1%. Reserve Bank Governor Sanjay Malhotra said that whatever the turmoil in the world, India’s economy remains absolutely strong. This strong growth expectation immediately supported the broken investor confidence.

Decision on expensive loan after four years

The meeting of RBI’s Monetary Policy Committee was held from October 5 to 7. In which all the members together decided to increase the repo rate by 25 basis points. Now this rate has increased from 5.25% to 5.5%. Interest rates have been hiked for the first time in four years due to rising inflationary pressures.

The central bank has also tightened its stance and changed it to ‘calibrated tightening’. The standing deposit facility was raised to 5.25%, while the bank rate was kept at 5.75%. The governor also gave a clear indication that there is no hope of a rate cut in the coming days. Due to this, there was a lot of pressure in the market in the initial phase.

Pressure from around the world

This decision spooked the market not only within the country but also foreign news. Yemen’s Houthi rebels attack Saudi Arabia, raising concerns over crude oil supplies. Brent crude jumped more than 1% to near $102 a barrel. Apart from this, the 10-year bond yield in America has increased from 5.27% to 5.31%. US President Donald Trump’s statements have also created some tension at the global level.

VK Vijayakumar of Geojit Investments says the market was already expecting an increase of 25 basis points. The truth is that these rate hikes have become necessary to prevent foreign investors from withdrawing money in view of the strengthening dollar in the US. If we talk about sectors, Kotak Bank, Bharti Airtel and Bajaj Finance were the gainers, while stocks like Titan, Asian Paints and Ultratech Cement saw heavy selling.

Expert opinion on new investments

Now the question is what action should investors take at this time? Should they invest new money in this boom or be a bit more cautious now? Share.market opined by PhonePe expert Nischal Jain that investors should neither sell their shares in a panic nor rush to invest money after a sudden surge.

Experts believe that investing new money in haste at this time should be avoided. Investors should keep some cash in their pockets. When the market approaches major support levels, one should gradually buy large and safe companies from strong sectors like banking, FMCG, auto and IT. Instead of investing all the money at once, investing little by little in autumn will prove to be the wisest decision.