Indian markets decrease weekly gains due to profit-booking following RBI policy

On Friday, Indian shares fell for the second consecutive day as a result of persistent profit-taking and a general decrease after the Reserve Bank of India hinted that tighter monetary conditions would linger. The benchmark S&P BSE Sensex dropped 0.35% to 62,625.6 while the blue-chip Nifty 50 closed 0.38% lower at 18,563.40.

The benchmarks maintained weekly gains despite declining in the previous two sessions, thanks in part to a 1% increase in three sessions prior to the RBI’s policy announcement on Thursday. Fast-moving consumer goods (FMCG), Information Technology (IT), and public sector banks all saw declines of 0.8% to 1.3%, making up 11 of the 13 major industry indexes.

In contrast to the advance in Wall Street overnight and Asian equities on Friday, domestic equities fell on Friday. This was because prospects of a rate pause at the Fed’s upcoming meeting on June 14 increased after data indicated that weekly jobless claims reached over a 1-1/2-year high, signifying a cooling economy.

The European Central Bank and Bank of Japan will announce interest rate decisions the next week, and inflation figures for both India and the United States will be released the following week. The repo rate was held at 6.50% by India’s central bank for a second consecutive meeting on Thursday, but the bank also stated that monetary conditions will stay tight to keep inflation below the 4% target.

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