RBI raises repo rate by 50 bps to 8%

RBI’s First Quarter Review 2011-12 - 26th July, 2011
In the backdrop of higher inflationary pressures, global economic uncertainty, higher commodity prices, RBI continued its monetary tightening measures. RBI raised repo rate by 50 bps to 8% which was more than the expectations of 25 bps. Reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, automatically adjusts to 7% & CRR has been retained at 6%.
On hearing the RBI rate hike announcement Nifty dropped 100 points instantaneously. Nifty further declined to 5570 and closed at 5575 with a loss of 105 points. For details see table above. Nifty futures range was 5709 -> 5555, having a difference of 154 points. As Nifty closing is below the Agni level at 5628, Nifty may move further down to 5500 - 5464 (bottom of M2). Tomorrow's Agni level is at 5629.