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Metal and Real Estate Stocks Plunge After RBI Raises Repo Rate by 25 Basis Points
- •The Reserve Bank of India increased the benchmark interest rate by 25 basis points to 5.50 percent, marking the first hike in nearly four years.
- •The Nifty Metal index led sectoral losses, dropping 2.3 percent with National Aluminium Company Ltd falling over 4 percent.
- •The Nifty Realty index declined up to 1.5 percent, with Brigade Enterprises and Prestige Estates Projects falling up to 3 percent.
- •Governor Sanjay Malhotra stated that rate cuts are off the table in the near term as the central bank shifts toward calibrated tightening.
- •Industry experts warn that higher borrowing costs could impact housing demand and affordability for homebuyers.
Key Questions Answered
The Reserve Bank of India raised the benchmark repo rate by 25 basis points to 5.50 percent, marking its first increase in nearly four years. Following the announcement, metal and real estate stocks fell up to 4 percent due to concerns over higher borrowing costs and reduced demand.
The Nifty Metal index fell 2.3 percent, with National Aluminium Company Ltd (NALCO) leading the losses by declining over 4 percent. Additionally, the Nifty Realty index declined up to 1.5 percent, with Brigade Enterprises and Prestige Estates Projects falling up to 3 percent.
The RBI shifted its stance towards "calibrated tightening," effectively ruling out any near-term rate cuts. Governor Sanjay Malhotra stated that future policy actions will either be rate hikes or pauses depending on evolving economic conditions.
