Equity benchmarks were extremely volatile in trade on Wednesday, before shutting shop with nearly half a percent cut. It was looking like a nice recovery just one hour before the closing trade but that could not sustain for long. The Sensex shed more than 1,100 points in last seven sessions.
Rate tightening measures taken by RBI in a policy meeting yesterday to contain rising inflation have still some impact on rate sensitives barring some banks and capital goods shares today. Midcap infrastructure and non-banking finance companies' shares took huge beating today as well. Reserve Bank of India had hiked repo and reverse repo rate by 50 basis points each yesterday. Anish Damania of Emkay Global Financial Services said some pain was expected to continue."For the last one-and-a-half years, the rally has been largely driven by earnings growth and growth which kept surprising people. The RBI said that inflation is working its head up and their main priority is to slowdown this inflation growth. At the cost of economic growth, they would be taking measures to cut inflation. If growth slows down, which is more likely as interest rates rise beyond a certain level, we would see more headwinds to the market," Damania said.Experts feel that the Reserve Bank of India
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