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RBI Holds Repo Rate as Oil, Chip Shock Rattle Markets

Geopolitical setbacks and Broadcom's revenue shortfall have kept oil prices high and cooled the AI‑semiconductor rally, prompting the central bank to announce steps to attract foreign capital.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 2, 2026.     REUTERS/Wolfgang Rattay
A board above the trading floor of the New York Stock Exchange displays the closing number for the Dow Jones industrial average, Wednesday, June 3, 2026. (AP Photo/Richard Drew)
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 3, 2026.  REUTERS/Brendan McDermid
A Broadcom logo and a computer motherboard appear in this illustration created on August 25, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

Overview

  • The Reserve Bank of India’s Monetary Policy Committee left the repo rate at 5.25% on Friday and retained a neutral stance while announcing measures to lure foreign investment, including higher NRI equity limits, expanded access to government securities, tax reliefs for eligible foreign buyers and concessional terms for some foreign‑currency deposits.
  • Hostilities in the Middle East have stalled U.S.‑Iran talks and seen Hezbollah reject a ceasefire, factors that helped push Brent crude toward $95 a barrel and raised concern about a prolonged energy shock that would pressure energy importers.
  • Broadcom reported second‑quarter revenue slightly below expectations, triggering profit taking in AI‑linked and semiconductor stocks and sparking steep declines in tech‑heavy Asian markets such as South Korea.
  • Global markets showed a split reaction with the Dow reaching a record close while the Nasdaq and Asian tech benchmarks lagged, and investors shifted toward safer assets ahead of U.S. payrolls data.
  • Indian equities traded with volatility and ended modestly lower as heavy foreign institutional selling continued, the rupee recovered somewhat after RBI measures, and households and firms face the risk of higher inflation from sustained oil prices.