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Sensex cracks 554 points after RBI announcement

NEW DELHI: Markets on Thursday plunged after the Reserve Bank of India (RBI) reduced repo charge - the speed at which it lends to banks - by way of 25 foundation points (bps). The benchmark BSE sensex crashed 554 points or 1.38 in line with cent to near at 39,530, while the wider NSE Nifty cracked 178 points or 1.48 in line with cent to settle at 11,844.

Financial stocks tanked essentially the most on each BSE and NSE platforms. On BSE, main laggards include IndusInd Bank, Yes Bank, State Bank of India, L&T and Tata Steel with their stocks falling as much as 6.74 in line with cent. 23 out of 30 stocks finished in crimson on the BSE index.

Loans might change into cheaper as RBI cuts repo charge for third time in a row

The Reserve Bank of India (RBI) on Thursday reduced repo charge by way of 25 foundation points (bps) to five.75 in line with cent. This is the third instantly relief within the charges in 2019. The last time the RBI moved this briefly to decrease charges was in 2013 to restore the moribund economy from expansion charges that had slipped to a decade low. The move will likely bring down the mortgage EMIs.

On NSE, all of the sub-indices witnessed losses with Nifty PSU Bank and Bank sliding as much as four.90 in line with cent.

According to investors, investor sentiment took a hit after the RBI lowered its benchmark lending charge to just about a nine-year low of 5.75 in line with cent.

Slashing benchmark lending charges for the third time this year, the RBI said its long term monetary coverage stance will likely be extra accommodative.

RBI cuts charges by way of 25 bps: Here's what experts said

The Reserve Bank of India cut its coverage rate of interest by way of 25 foundation points in a widely expected move on Thursday, while also converting its monetary coverage stance to "accommodative" after the economy grew at its slowest pace in over 4 years within the January-March quarter.

"RBI reduced repo rate by 25 bps as expected. The change in stance to ‘accommodative' was a bit of a surprise. Debt markets will take this as a significant positive move though most of the rate cut cycle is probably over," Suvodeep Rakshit, senior economist, Kotak Institutional Equities instructed information agency PTI.

"The tone of the RBI policy was dovish and highlights the concerns on growth. We maintain our call for another 25 bps rate cut in August factoring in the benign inflation trajectory and the growing concerns on growth," Rakshit added.

The central bank's determination to remove charges on NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement System) transactions also pulled the markets decrease.

RBI gets rid of charges on NEFT, RTGS transactions

The Reserve Bank of India (RBI) on Thursday decided to not levy charges on RTGS and NEFT transactions. In order to offer an impetus to virtual price range movement, it's been decided to get rid of the costs levied by way of the Reserve Bank for transactions processed within the RTGS and NEFT methods," the RBI notification read.

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