Equity markets fell sharply in the late afternoon session
on Wednesday after the RBI in a sudden move increased the benchmark repo rate by 40
basis points (bps) to 4.40% to curb inflation.

The BSE Sensex plunged 1,306.96 points or 2.29% to close
at 55,669.03. During the day, it fell 1,474.39 points or 2.58% to 55,501.60.

The NSE Nifty plummeted 391.50 points or 2.29% to close
at 16,677.60.

Also Read | RBI raises repo rate by 40 bps to 4.40% says Governor Shaktikanta Das

On the sectoral front, all indices closed in the red with
auto, FMCG, power, healthcare, metal, realty, and capital goods indices down
1-3%. BSE midcap index fell 2.63% and the small-cap index fell 2.11%

The Reserve Bank of India (RBI) raised the repo rate by
40 basis points to 4.40% in a bid to contain inflation, which has remained
stubbornly above the RBI comfort level of 6% for the last three months.

Also Read | RBI raises CRR by 50 bps to 4.5% from May 21 to tighten liquidity

The decision came after an off-cycle meeting of the
Monetary Policy Committee (MPC), with all six members unanimously voting for a
rate hike while retaining the accommodative policy.

“The MPC’s decision, in an unscheduled meeting, to
raise the repo rate by 40 bps and CRR by 50 bps is a surprise since it came on
the LIC IPO opening date. MPC’s proactive move is justified from the
perspective of inflation management, but the timing leaves a lot to be desired.

Also Read | Key announcements from RBI Governor Shaktikanta Das

“The above 1,000 point crash in Sensex has soured
the sentiments on the opening day of India’s largest IPO,” said V K
Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Major laggards from the Sensex pack include Bajaj Finance
down by 4.29%, Bajaj Finserv down by 4.18%, Titan Company down by 4.11%,
IndusInd Bank down by 3.98%, HDFC Bank down by 3.34%, Maruti Suzuki down by
3.17%, Reliance down by 3.14%, Asian Paints down by 2.99%.

Also Read | LIC IPO live updates: Largest public issue opens for subscription

Among the gainers were Power Grid Corp up by 2.75%, NTPC
up by 0.73% and Kotak Mahindra Bank up by 0.07%.

Indian rupee rallied 23 paise to settle at 76.42 against
the US dollar.

Asian market peers in Hong Kong and Seoul ended lower.
European markets were also trading down in the afternoon session. US Stock exchanges settled with gains on Tuesday.

International oil benchmark Brent crude rose 3.12% to USD
108.3 per barrel.