The Nifty slid 173 points to 22,603 on Wednesday, breaking a two‑day streak that had lifted the index above 22,700 and rattling sentiment after the RBI announced a 25‑basis‑point hike.
The Sensex followed suit, falling 429 points to 72,639, as the higher‑rate environment pressured debt‑sensitive stocks. NBFCs and small‑finance banks were particularly hard hit, with AU Small Finance Bank and Cholamandalam Investment and Finance Company among the top losers, reflecting the immediate impact of tighter credit terms.
Currency markets mirrored the caution, with the rupee slipping to ₹96.78 per dollar – a five‑month low – tightening the cost of imports and adding pressure on export‑heavy companies. The dollar index climbed to 104.2, supporting a weaker INR.
Sector‑level moves were mixed: realty and auto indices fell as much as 2%, while housing finance and PSU banks gained modestly, led by Bank of Maharashtra and LIC Housing Finance. Titan Company dropped 4% after reporting Q2 jewellery sales below consensus, whereas Kotak Mahindra Bank rose 2% on a strong earnings outlook.
Market breadth turned negative, with 41 Nifty stocks closing in the red and the advance–decline ratio tightening to 2:3. Analysts note that the RBI’s policy statement is expected next month, and traders should keep a close eye on the upcoming Q3 results of the beleaguered NBFC segment.
Looking ahead, the RBI is likely to maintain the higher policy rate for the foreseeable future, signalling a cautious stance on inflation. Investors will gauge the next move by monitoring the RBI’s meeting notes and corporate earnings from rate‑sensitive sectors.