Reserve Bank ups repo

Continuing with its anti-inflationary stance, the Reserve Bank of India (RBI), in its mid-quarter policy review, hiked repo and reverse repo rates by 25 basis points (bps) each.

This takes repo (rate at which it lends to banks) to 7.5% and reverse repo (rate at which it borrows) to 6.5%. This is in line with a CNBC-TV18 poll. The cash reserve ratio (amount of funds that banks have to keep with RBI), however, has been left unchanged at 6%.

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Nifty down ahead of RBI policy

Equity benchmarks tumbled more than half a percent in the opening trade following fall in global markets, reacting to Greek debt problems. Greece's prime minister offered to quit and make way for a national unity government.

Another worry for the market is likely hike in repo rates today by the RBI in its policy meeting. The Nifty still holds the 5400 level.

Credit policy review

All eyes will be on the Reserve Bank today as it will announce its mid quarter policy review today. RBI Governor is unlikely to take a pause on his anti inflationary stance. That's the consensus of a CNBC-TV18 poll of bankers and economists, entire 100% expect a hike in the repo rate by 25 basis points to 7.5%.

Credit policy review

Gold rises as inflation worries

Gold rose on Tuesday after a flurry of inflation data signalled a continued increase in price pressures, while this week's near-1% decline in the bullion price enticed some physical buying.

Renewed concern about Greece and its ability to fund itself remained on the boil, while US wholesale prices rose again in May and consumer spending staged its first drop in 11 months, fanning existing concern about the world's largest economy.

Chinese data earlier showed inflation in the world's second largest economy is running at its fastest pace in almost three years, giving investors an additional incentive to buy gold, which can act as a hedge against rising price pressures.