The idea is that people will spend less if borrowing money or carrying a balance on a credit card costs more.

Indices traded with huge volatility on Thursday’s weekly expiry. Nifty plunged 0.50 per cent while Sensex dipped 350 points.

RBI Governor stated that despite a fall in crude oil prices and commodity prices, inflation is at an uncomfortably high level. However, the domestic activity has been resilient while PMI in July is at an eight-month high. For the next financial year, RBI retains its CPI forecast at 6.7 per cent.

Indices soared higher on the monthly expiry day as Nifty closed above the 16,900-mark. It climbed 1.73 per cent while Sensex jumped 1,041 points.