RBI Credit Policy: How markets, bond yield and rupee reacted?

Reserve Bank of India has kept the repo rate unchanged at 6.5%. However, the governor Shaktikanata Das has said that this pause is only for this meeting and will be changed if the situation warrants.

Meanwhile, the Indian benchmark indices, Bond yields and the rupee reacted sharply to the Monetary Policy Committe's decision.

Markets were in the red before the announcement, as investors were cautious. The BSE sensex fell 165.16 points to 59,524.15 after a weak beginning. The broader NSE Nifty declined 45.5 points to 17,511.55. Both the indices had fallen by 0.3% ahead of the RBI announcement. Immediately, after the announcemet, the indices gained and reversed the early losses. The Niftywas up 0.15% at 17,582.95 as of 10:14 a.m. IST, while the Sensex rose 0.18% to 59,795.93.

The Bond yield also crashed sharply during the morning trade, after Governor Shaktikanta Das's announcement. Before the announcement, the yield on the 10-year benchmark 7.26% 2032 bond were trading at 7.1980% as of 10:35 am IST, as against 7.2750% close on the previous trading session. After the announcement, the bond yield went as low as 7.1469%. The liquid five-year 7.38% 2027 bond yield crashed as much as 16 bps to 7.01%.

The Indian Rupee also declined agains the U.S. dollar. Before the announcement the Rupee was at 81.88 per U.S. Dollar. As RBI declared no change in the repo rate, the Rupee declined to an intraday low of at 82.06 per U.S. dollar.