Sensex Trades Flat; RBI Cuts Repo Rate By 25 Bps

Share markets in India are presently trading on a volatile note after the Reserve Bank of India's monetary policy committee (MPC) reduced the repo rate by 25 basis points (bps) to 5.15%.

Sectoral indices are trading mixed with stocks in the FMCG sector and consumer durables sector witnessing selling pressure, while IT stocks and automobile stocks are witnessing buying interest.

The BSE Sensex is trading down by 30 points while the NSE Nifty is trading down by 16 points. The BSE Mid Cap index is trading down by 0.1%, while the BSE Small Cap index is trading up by 0.1%.

The rupee is currently trading at 70.87 against the US$.

In news from the banking sector, the Reserve Bank of India (RBI) cut its benchmark interest rates for the fifth time this year to boost economic growth. The RBI cut repo rate by 25 basis points to 5.15%, which takes its cumulative cuts so far this year to 135 bps.

The six-member MPC decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

The MPC also sharply reduced its growth forecast for the fiscal year 2019-2020 to 6.1% from 6.9% earlier. The committee noted that risks to growth have emerged due to weak domestic demand and sagging export prospects on account of continuing trade tensions.

On the other hand, it retained its consumer price inflation forecast for the second half of the fiscal year 2019-202 as expected at 3.5%-3.7%.

In other news, the RBI on Thursday increased the withdrawal limit for Punjab and Maharashtra (PMC) Bank customers to Rs 25,000 from Rs 10,000.

In a press release, it said "the Reserve Bank of India again reviewed the bank's liquidity position and, with a view to reducing the hardship of the depositors, has decided to further enhance the limit for withdrawal to Rs 25000."

In a relief for customers caught unaware by the sudden curbs on the co-operative bank, the new limit will allow 70% of the bank's depositors to withdraw all of their money, the central bank said in a statement.

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