Top News

Benchmark indices staged a sharp rebound in morning trade on Friday, reacting positively to the Reserve Bank of India’s unexpected move to cut the repo rate by 50 basis points. The higher-than-anticipated rate reduction was aimed at revitalising economic growth, which slipped to a four-year low of 6.5 per cent in FY25.

As a result, both Sensex and Nifty rallied over 1 per cent by noon. The BSE Sensex soared more than 800 points to 82,273.50, while the NSE Nifty jumped 275 points to cross 25k and trade at 25,026.45, around 11:58 AM. This rally came after both indices initially opened lower but quickly recovered on the back of the central bank’s pro-growth policy decision.

Rate Cut Spurs Sectoral Gains

Interest-rate-sensitive sectors saw an immediate uplift. The realty index recorded a strong gain of more than 4 per cent, while the Financial Services Ex-Bankd climbed close to 3 per cent. Market participants were buoyed by the decision, which marks the third straight cut in repo rates this year.

RBI Governor Sanjay Malhotra, following a comprehensive review of the economic outlook and financial conditions, announced the rate cut, bringing the key policy rate down to 5.5 per cent—a level last seen three years ago. This move is expected to reduce borrowing costs for home, auto, and business loans, offering widespread relief to consumers and corporates alike.

“The Monetary Policy Committee (MPC) decided to reduce the repo rate by 50 basis points,” Malhotra said, while keeping the GDP growth forecast unchanged at 6.5 per cent. However, the RBI revised its inflation projection downward from 4 per cent to 3.7 per cent, anticipating a favourable monsoon season.

How Will Repo Rate Cut Impact Markets?

Explaining the impact on markets, VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near-term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins."

Within the Sensex pack, major gainers included Bajaj Finance, Axis Bank, Maruti, Kotak Mahindra Bank, IndusInd Bank, State Bank of India, Bajaj Finserv, and HDFC Bank. On the other hand, Sun Pharma, Infosys, Nestle, and HCL Tech emerged as the session's laggards.

Global Cues Mixed; FIIs Continue Selling

Across Asia, Japan’s Nikkei 225 and South Korea’s Kospi traded higher, whereas Shanghai’s SSE Composite and Hong Kong’s Hang Seng edged slightly lower. In the US, equity markets ended Thursday’s session in the red.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 208.47 crore on Thursday, as per exchange data. Meanwhile, Brent crude, the global oil benchmark, slipped by 0.28 per cent to touch $65.16 per barrel.