Sensex opens higher, but slips on rate hike fears

MUMBAI - Indian equities opened higher Tuesday, ahead of the monetary policy update by the central bank later in the day, but slipped on fears that interest rates may be hiked for the sixth time this year.

The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened the day at 20,407.18 points, against the previous day’s close at 20,355.63 points, and moved higher to 20,414.47 points, immediately after.

But fears that the Reserve Bank of India (RBI) could hike interest rates in the second-quarter monetary policy review brought down the index to 20,338.08 - a loss of 17 percent over the previous close.

At the National Stock Exchange (NSE), the broader S&P CNX Nifty was ruling at 6116.70 points, with a loss of 0.85 points.

In the mid-quarter review Sep 16, the RBI had revised the repurchase rate to six percent from the 5.75 percent, while the reverse repurchase rate was hiked to five percent from 4.5 percent.

This review had seen the fifth such rate hike since the apex bank decided to tighten its monetary policy in January - first Jan 29, followed by another March 19 and again on July 2 and then on July 27 - to rein in inflation.