The Reserve Bank of India (RBI) has hiked its key interest rates, repo and reverse repo rates by 50 bps (basis points). Market has expected the hike by 25 bps and this has given a shock to the market participants. The rate hike has taken the reverse repo to 7% and the repo rate to 8%. Also RBI has kept the cash reserve ratio (CRR) unchanged at 6%.
Seeing this the markets has reacted badly, we have seen that banking stocks dropped by about 3% and the market sentiment has changed. We are seeing that market may need much time to digest this interest rate hike by RBI. We advice to trade short in front line banking stocks like ICICIBANK, SBIN, HDFCBANK, AXISBANK.