Sensex, Nifty 50 Shoot Up As Investors Cheer RBI's Interest Rate Hike

Sensex was up around 0.58% to reach 60,640.85, while NIFTY 50 soared over 120 points to 17,849.57 in the early hours of trading on Wednesday after the rate hike was announced. 

What Happened: Reserve Bank of India's Monetary Policy Committee hiked the key interest rates – for the sixth time since May 2022 – by 25 basis points taking the repo rate to 6.5. 

RBI Governor Shaktikanta Das said, that the hike was decided by a majority of 4-2, "to ensure that inflation remains within the target going forward while supporting growth."

Das also informed that Consumer price inflation (CPI) went down the upper tolerance level of 6% “during November-December 2022, driven by a strong decline in prices of vegetables." However, "core inflation, however, remains sticky," he added. 

The hike would mean that the people's loan EMIs would go up, leaving them with less disposable income resulting in a decline in spending.

So why is the market up?

Because the hike was in line with market estimates. Most experts expected the central bank to raise the rates for the final time in the current tightening cycle before pausing the hikes going forward.

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