Mumbai: The Indian stock market saw a strong rally on Friday following the Reserve Bank of India’s announcement of a significant rate cut.
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RBI Governor Sanjay Malhotra revealed a 50 basis points (bps) reduction in the repo rate—from 6% to 5.5%—along with a 100-bps cut in the Cash Reserve Ratio (CRR), bringing it down from 4% to 3%.
Markets React Positively
The immediate impact was visible on the Indian indices. As of 10:46 am:
- Sensex was up by 505.7 points or 0.62% at 81,947.74
- Nifty gained 168.40 points or 0.68% to reach 24,919.30
Bank and Midcap Indices Lead Gains
- Nifty Bank surged 682.95 points or 1.22% to 56,443.80
- Nifty Midcap 100 rose 363.20 points or 0.62% to 58,666.20
- Nifty Smallcap 100 was up 48.25 points or 0.26% at 18,480.85
Top Gainers and Losers
Among the Sensex constituents, the top gainers included:
- Bajaj Finance
- Axis Bank
- Maruti Suzuki
- Kotak Mahindra Bank
- IndusInd Bank
On the other hand, the top losers were:
- Sun Pharma
- Infosys
- Nestle India
- HCL Tech
Also Read: Indian Stock Market Opens in Green Amid Mixed Global Cues
Analysts Weigh In on Policy Shift
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., noted:
“The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. The credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins.”
Madhavi Arora, Chief Economist at Emkay Global, added:
“The RBI appears to have front-loaded all policy actions, be it higher-than-expected rate cuts or infusing durable albeit staggered liquidity via lower CRRs. All of that now implies that the ball is in the banks’ court to transmit easier financial conditions faster.”
Early Session Overview
Before the RBI announcement, domestic indices opened flat. Buying interest was seen in the IT and PSU Bank sectors. Meanwhile, India VIX dropped 4.21% to 15.08, indicating lower market volatility expectations in the near term.