Stock markets snap three-day rally on rate hike fears; Sensex drops 318 points - The Hindu

Indian equities ended a three-day rally after the headline reported that rate hike fears drove a sell-off, with the BSE Sensex falling 318 points. The reported transmission channel runs through the discount rate: expectations of tighter monetary policy raise borrowing costs and lower the present value of future corporate earnings, which tends to compress equity multiples across the index. Rate-sensitive sectors such as banks, real estate, and auto, where funding costs and credit demand are most directly affected, are typically the most exposed in such episodes, while the headline does not specify which sectors led the decline. The next catalyst traders will watch is the Reserve Bank of India's monetary policy committee decision and accompanying guidance, alongside domestic CPI inflation data, which will shape whether rate hike expectations firm up or fade.

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