Indian share markets rallied in the final hour of the trading session after the RBI hiked repo rate by 25 bps to 6.25%. At the closing bell, the BSE Sensex finished higher by 276 points. While, the NSE Nifty finished higher by 92 points. Meanwhile, the BSE Midcap Index ended up by 1.3% while BSE Small Cap Index ended up by 0.8%.
All sectoral indices ended the day in green with consumer durables stocks and metal stocks leading the pack of gainers.
Overseas, Asian stock markets finished higher today with shares in Hong Kong leading the region. The Hang Seng is up 0.5% while Japan's Nikkei 225 is up 0.4% and China's Shanghai Composite is up 0.03%. European markets are higher today with shares in Germany leading the region. The DAX is up 0.6% while London's FTSE 100 is up 0.4% and France's CAC 40 is up 0.2%.
The rupee was trading at Rs 67.04 against the US$ in the afternoon session.
Bharti Airtel share price surged 4.6% after it was reported that the company is in advanced talks with US telecom major Verizon for a broad partnership around Internet of Things (IoT) as the Indian telecom market leader readies expansion plans for its enterprise business ahead of Reliance Jio's much-awaited commercial entry into the segment.
In the news from the economy. The Reserve Bank of India (RBI) decided to increase key rates following its June monetary policy meet.
The Reserve Bank's six-member MPC (monetary policy committee), headed by governor Urjit Patel, hiked the repo rate by 25 bps (basis points) or 0.25% to 6.25%.
The repo rate is the rate at which the RBI lends short-term money to the banks. The central bank has also increased the reverse repo rate -- the rate at which the RBI borrows from commercial banks -- to 6%.
The RBI said that the decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
In the second bi-monthly monetary policy for the current fiscal, the RBI revised upwards the retail inflation range to 4.8-4.9% in the first half of 2018-19, and 4.7% in the second half. It includes the impact from HRA (House Rent Allowance) for central government employees, with risks tilted to the upside.
It was in January 2014 that the RBI had last raised the short-term lending rate (repo) to 8%, since then it has either reduced it or maintained status quo.
Indicating hardening of the interest rate scenario, several major lenders including SBI, PNB and ICICI Bank have already raised their lending rates from 1 June. Some of the banks have also increased the deposit rates.
The RBI monetary policy statement is one of the most tracked events in the financial world. The chart below shows how India's inflation and policy rates stand in comparison with other Asian economies.
India's Policy Rates Compared to Asian Economies
Rate cut or not, at Equitymaster, we do not attempt to predict how and when macroeconomic developments will unfold. Instead, we focus on the fundamentals and the underlying business strength of companies.
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In the news from the pharma sector. As per an article in a leading financial daily, Glenmark Pharmaceuticals Inc., USA (Glenmark) has received final approval from the United States Food & Drug Administration (USFDA) for HAILEY 1.5/30 (Norethindrone Acetate and Ethinyl Estradiol Tablets USP, 1.5 mg/30 mcg).
The drug is a generic version of Loestrin 21 1.5/30 Tablets, of Allergan Pharmaceuticals International (Allergan) and for HAILEY Fe 1.5/30 (Norethindrone Acetate and Ethinyl Estradiol Tablets, USP and Ferrous Fumarate Tablets, 1.5 mg/30 mcg), the generic version of Loestrin Fe 1.5/30, also of Allergan.
According to IQVIA sales data for the 12-month period ending April 2018, the Loestrin 21 1.5/30 Tablets market achieved annual sales of around US$24.2 million and the Loestrin Fe 1.5/30 market achieved annual sales of around US$41.3 million.
Glenmark's current portfolio consists of 137 products authorized for distribution in the US marketplace and 61 ANDAs pending approval with the USFDA.
Glenmark pharma share price closed the day up by 0.9% on the BSE today.
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