Sensex shrugs off rate hike, up 276 pts; experts welcome RBI move

Neutral stance by RBI allays fears of further tightening; experts say move warranted to stem outflows by foreign investors

Equity markets gained about one per cent on Wednesday even as the Reserve Bank of India (RBI) raised policy rates by 25 basis points (bps) to 6.25 per cent. 

Most economists were expecting the central bank to keep the rates unchanged. 

The surprise hiked didn’t dampen the market mood as the RBI stuck to its neutral stance, signalling that it doesn’t intend to embark on a tightening cycle. Market players said the hike was warranted to stem the foreign institutional investor (FII) outflow and rupee weakness. 

The Sensex gained 276 points, or 0.8 per cent to 35,179, while the Nifty 50 index rose