Sensex Gains 500 Points: Stock Market Rises on RBI Rate Cut and Improved Sentiment

The Indian stock market turned volatile into an opportunity on Friday, with the Sensex climbing over 500 points from the day’s low. The Nifty 50 also moved above the 26,100 mark, reflecting renewed investor confidence after the Reserve Bank of India (RBI) announced a 25 basis points rate cut.

The markets opened under pressure amid foreign fund outflows and mixed global cues. However, the RBI’s policy action, coupled with easing crude prices and a stronger rupee, helped equities recover sharply as the day progressed.

Market Performance: Sensex and Nifty Today

• Sensex: Up 313.54 points (0.37%) to 85,578.86 at 10:50 a.m.
• Nifty 50: Advanced 87.85 points (0.34%) to 26,121.60

Several rate-sensitive sectors led the rally. Financial services stocks, banks, and PSU banking shares saw significant gains. Meanwhile, select consumer and aviation stocks faced minor pressure.

Key Drivers Behind the Rally

1. RBI Rate Cut Boosts Market Sentiment

The RBI’s Monetary Policy Committee (MPC) voted unanimously to reduce the policy rate by 25 bps to 5.25%. Lower interest rates ease borrowing costs for consumers and businesses. This often encourages lending, spending, and investment, giving a positive push to equity sentiment.

• Policy Rate: 5.25%
• Impact: Supports economic activity, boosts investor confidence

2. Buying in Rate-Sensitive Sectors

Financial services were among the top performers as lower borrowing costs made loans more attractive.

• Nifty Financial Services: +0.8%
• Bank Nifty & PSU Banks: +0.5% and +0.8%, respectively
• Other sectors: Auto index +0.5%, Realty index +1%

Lower rates encourage credit demand, benefiting banks, NBFCs, and rate-sensitive sectors like automobiles and real estate.

3. Crude Oil Prices Ease

Brent crude dipped to USD 63.15 per barrel, easing input costs and inflationary pressure. Softer crude prices provide relief to multiple sectors, including manufacturing, transport, and consumer goods.

• Brent Crude: -0.17% to USD 63.15/bbl

4. Positive Global Cues

Asian markets maintained a firm stance, with South Korea’s Kospi and Shanghai’s SSE Composite trading in the green. While US markets were largely flat overnight, stable global cues contributed to improved risk appetite in domestic equities.

5. Volatility Declines

The India VIX, a measure of market risk and volatility, fell 2.29% to 10.57. A lower VIX generally signals increased investor confidence and willingness to take risks.

Summary

Friday’s session showcased a market rebounding from early losses, driven by the RBI’s 25 bps rate cut, falling crude prices, and stable global trends. Financials, banks, and realty stocks led the recovery, while overall risk sentiment improved as reflected in the India VIX.

The Sensex gained over 500 points from its intraday low, and Nifty 50 surged past 26,100, reflecting a mix of policy-driven optimism and easing macroeconomic pressures.