RBI Hikes Key Rates By 50 Bps; Market Reacts, Sensex Tumbles 463 Pts

Tuesday, May 03, 2011 SPECIAL LEAD Click here for India Business Update Mobile Version RBI HIKES REPO, REVERSE REPO BY 50 BPS The Reserve Bank of India has raised key rates by a higher-than-expected 50 basis points, stressing that tackling inflation is its main priority even if it comes at the expense of overall growth in the short term. The central bank raised the repo rate, its lending rate, by 50 bps to 7.25%, and the reverse repo, its borrowing rate, also by 50 bps to 6.25%. Interest rate on savings bank deposits has been hiked to 4% from 3.5%. Inflation has overshot even the most pessimistic projections, RBI said, adding it expects inflation to remain at elevated levels, at least in the first half of 2011-12, before coming down. Its baseline projection for WPI inflation for March 2012 is 6% with an upward bias. India's inflation in March 2011 rose 8.98% from a year earlier. read more LEAD STORIES RBI RATE HIKE SPOOKS MKTS, SENSEX TUMBLES 463 PTS Sensex closed at 18,534.69 after RBI hiked key policy rates and projected lower growth for this fiscal. Nifty fell 136.05 points to end at 5,565.25. read more OBAMA WATCHED LADEN 'SHOT IN LEFT EYE' LIVE Barack Obama along with his high-level team, watched the live coverage of commandos gunning down Osama Bin Laden, sitting in the White House. read more TOP STORIES • RBI warns of tough times, pegs GDP for 2011-12 at 8% • RBI advises immediate hike of petrol, diesel prices • Home, auto loans to cost more as RBI tightens policy • India Inc sends 'warning' to 'hawkish' RBI • RBI sets 26% cap on microfinance loans • RBI makes repo rate sole independent policy rate • Rupee slips by 18 paise on sustained dollar demand • Arrived at compromise formula for AI pilots: Ministry • Orissa to resume land acquisition for Posco project • Firstsource buys 74% stake in Dialog Axiata's BPO arm • Adani acquires Australian port for Rs 9,000 cr • SabMiller gets relief from I-T in Fosters case • Reid & Taylor plans $1 bn IPO by early June • GoAir plans to go for Rs 675 cr IPO • Media shifting to celebrity, lifestyle coverage • Vijayan now LIC MD, Rakesh Singh as chairman • 2G Scam: HC refuses to hear Morani's bail plea • Mercedes-Benz launches sports car at Rs 98.5 lakh • Sony CEO under fire as 25 mn more accounts hacked • Ganguly back in IPL, signs up with Pune Warriors more stories TOP VIDEOS Risks To Inflation On The Upside: D Subbarao, RBI Governor RBI's Tough Act Of 50 Bps Hike Right In Time: Dr C Rangarajan, Chairman, PMEAC Todays Policy Announcement Will Not Have Much of An Affect On The FMCG Sector: Adi Godrej, Chairman, GCPL I See A Rough Time For Nationalised Banks: BD Narang, Ex Chairman, Oriental Bank Of Commerce AT A GLANCE BSE 18534.69 -463.33 NSE 5565.25 -136.05 TURNOVER Rs. 171,165 cr BSE CASH Rs. 2,917 cr NSE CASH Rs. 12,935 cr NSE F&O Rs. 155,312 cr BULLION GOLD 22446 -180 SILVER 65012 -2844 CRUDE NYMEX 102.25 -0.08 BRENT 123.73 -1.39 FOREX $ / Re 44.51 +0.18 £ / Re 73.269 -0.16 € / Re 65.905 +0.46 EVENTS 4-6 May Bangalore India Bio 2011, Bengaluru 5 May Govt To Notify New M&A Rules Essar Vodafone Tax Case To Come Up For AAR Hearing 2G Scam: HC To Hear Bail Plea Of 5 Executives 5-6 May 6th Southern Asia Ports Logistics & Shipping 2011, ITC Park Sheraton & Towers, Chennai 6 May Centenary Conference Of Indian Civil Aviation, Leela Palace, New Delhi 7 May Mumbai Court To Decide on Hasan Ali Khan Case 2G Scam: Raja, Balwa Case Hearing EXPERT VIEWS "This (rate hike) was necessary to contain inflation. Inflationary pressure in the economy is still very high. Monetary policy tightening was required to contain inflation in the context of the volatility of commodity prices, including energy prices and food prices in the international market." Pranab Mukherjee Finance Minister "The increase in costs after the rate hike by the central bank would be passed on in the form of lending rate hikes." Chanda Kochhar CEO, ICICI Bank "This is certainly a very hawkish monetary stand and one which would make the investment environment more difficult. We are afraid that with growth slowing down, employment targets will not be achieved and this could generate greater social pressure." Chandrajit Banerjee Director General, CII WATCH OUT Young Turks Dream Decade This week on Young Turks Dream Decade we go On The Road to meet Girish Batra of NetAmbit, a financial products distribution company that is looking at listing in 2014. On Young Turks Tutorial, catch the Co-founders of My Sunny Balcony, a start-up that designs gardens, in a master class with Ankur Gulati of Draper Fisher Jurvetson. And on YT Buzz meet Anshul Gupta who is getting his hands dirty in the emerging organised laundry business with Quick Clean laundromat services. SHOW TIMINGS Wednesday 7:30 pm