RBI Hikes Interest Rates, is inflation the only thing on their minds?

Recently, owing to the new rules proposed by SEBI for takeovers, mergers and acquisitions, there was a speculation going on about a possible surge in promoters looking for liquidity to buy more stocks in their own companies...interestingly, RBI today announced a hike in the repo and reverse repo rates by 0.25% and 0.50% respectively, a move which could see banks deciding to make Auto, Home and most importantly, Commercial Loans dearer.

Currently, the market has given a 2 thumbs-up to the decision, as the Sensex scooted above the 18000 level, with Major Auto, Realty, Banking and IT stocks gaining, but it would be interesting to watch, how the market reacts to the hike in the longer term.