Indian equity benchmarks extended their decline for the
fourth consecutive session on Wednesday, with the Sensex falling over 200
points after the Reserve Bank of India raised the key interest rate by 50 basis
points to 4.90%.

Continuous foreign fund outflows and rising crude oil
prices also impacted the market sentiments.

The BSE Sensex declined 214.85 points or 0.29% to
settle at 54,892.49. During the day, the benchmark traded in a range of
55,423.97 and a low of 54,683.30.

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The broader NSE Nifty fell 60.10 points or 0.37% to close
at 16,356.25.

Home, personal, vehicle and other loan EMIs will increase
after the Reserve Bank of India (RBI) raised the key interest rates by 50 bps,
the second increase in five weeks, to rein in rise in prices that it saw
continuing to hurt consumers in short term.

With inflation persistently hovering above the upper
tolerance limit of 6%, the RBI’s six-member rate-setting panel voted
unanimously to raise the lending rate of the repurchase (repo) rate by 50 basis
points to 4.90%, Governor Shaktikanta Das said.

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Major laggards from the Sensex pack were Bharti Airtel
down by 3.31%, ITC down by 2.03%, Reliance down by 1.74%, Asian Paints down by
1.44%, Axis Bank down by 1.03%, IndusInd Bank down by 1.02%, ICICI Bank down by
0.78% and Kotak Mahindra Bank down by 0.65%.

Among the gainers were Tata Steel up by 1.70%, SBI up by
1.66%, Dr Reddy’s Labs up by 1.52%, Bajaj Finance up by 1.25%, TCS up by 1.22%
and Titan up by 1.16%.

The rupee gained 3 paise to settle at 77.75 against the US dollar.

Also Read | RBI MPC meet: Central bank raises inflation projections above 6%

“RBI’s projections of GDP growth rate of 7.2% and
inflation of 6.7% for FY23 reflect a realistic monetary policy. The higher
inflation projection indicates that the central bank recognises the seriousness
of inflation and the 50 bps repo rate hike is a message that they are
determined to anchor inflation expectations.

“The Governor’s remark that the economy remains
resilient and recovery has gathered momentum, is bullish from the market
perspective,” said VK Vijayakumar, Chief Investment Strategist at Geojit
Financial Services.

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The hike follows a 40 bps rise in early May at an
unscheduled meeting that kicked off the central bank’s tightening cycle.

To balance the inflation-growth dynamics, RBI will remain
focused on the withdrawal of accommodation as system liquidity continues to be
high. Withdrawal of accommodation will be done in a way that growth will
continue to get adequate support, said RBI Governor Shaktikanta Das.

Also Read | RBI MPC meet: Home loan EMIs to get costly as central bank hikes repo rate

The Monetary Policy Committee (MPC) raised its inflation
forecast for the current fiscal (April 2022 to March 2023) to 6.7% from the
April prediction of 5.7% but retained its economic growth projection at 7.2%.

Among Asian markets, Shanghai, Tokyo and Hong Kong
settled higher, while Seoul ended lower.

European stock markets were trading mostly lower during
afternoon trade.

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US stock markets had settled with gains on Tuesday.

Brent crude, the international oil benchmark jumped 0.93%
to USD 121.69 per barrel.

According to stock exchange data, foreign institutional
investors sold shares worth Rs 2,293.98 crore on Tuesday.