Punjab, Oct. 7 -- The Sensex fell 429.11 points to 72,638.70 and the Nifty 173.05 to 22,603.05, snapping a two-session run after the RBI hiked. It had been down about 400 points further at the day's low.
The recovery is the interesting half
The market fell hard on the announcement and then took back roughly 400 points of it before the close.
That pattern - sharp drop, partial recovery - usually means the decision was worse than priced but the commentary was better than feared. A 25 basis point hike was broadly expected; the shift to calibrated tightening was not, and that is what did the initial damage.
Then Malhotra said the next move is a hike or a pause. "Pause" was enough to bring buyers back.
Why a rate hike hits this market harde...