Market Performance: Sensex and Nifty React to RBI Move
The Indian stock market started the day on a cautious note but soon gained momentum after the Reserve Bank of India’s latest monetary policy update. The RBI’s Monetary Policy Committee (MPC) caught many by surprise, reducing the repo rate by 25 basis points to 5.25%, highlighting controlled inflation and robust growth momentum.
By mid-morning, the Sensex had climbed over 250 points to 85,522, while the Nifty 50 rose 80 points to 26,113. Broader markets, including midcaps and smallcaps, saw modest declines, reflecting selective sectoral optimism.
Liquidity-sensitive sectors, in particular, responded sharply to the rate cut, with banks, autos, and realty leading the way.
Main News: RBI’s Monetary Policy Highlights
The RBI’s policy decision combined a cautious approach with an eye on growth. Key highlights include:
- Repo Rate: 5.25% (down 25 bps)
- SDF Rate: 5%
- MSF Rate: 5.50%
Governor Sanjay Malhotra described the current phase as a “Goldilocks” scenario — inflation is under control, while growth remains firm. The MPC raised FY26 GDP growth to 7.3% from 6.8% and revised CPI inflation down to 2% from 2.6%.
The repo rate cut comes amid easing borrowing costs, which are expected to support loan demand across sectors like banking, real estate, and automobiles.
Rate-Sensitive Sectors Shine
Rate-sensitive sectors saw immediate gains after the announcement. Banks reversed early losses, auto stocks climbed, and realty surged on positive sentiment. Key movements included:
- Nifty Bank: +0.65%
- Nifty Auto: +0.4%
- Nifty Realty: +1.5%
- Nifty Financial Services: +0.7%
- Nifty PSU Bank: +1.2%
- Nifty Private Bank: +0.7%
Banks & Financial Services: Punjab National Bank, AU Small Finance Bank, IDFC First Bank, SBI, and Canara Bank added between 0.5–1%. Federal Bank, IndusInd Bank, and Axis Bank were the few laggards.
Financial services like SBI Cards, Bajaj Finance, and Shriram Finance gained 2%, while Bajaj Finserv and SBI Life rose over 1%.
Auto & Realty: Auto index rose modestly. Maruti and Eicher gained around 1%, while Bosch, M&M, and TVS Motors added 0.5%. Realty stocks like Prestige Estates, Signature Global, and Oberoi Realty jumped over 1%, with DLF and Lodha up 0.5%.
The RBI’s rate cut provides a supportive backdrop for sectors sensitive to borrowing costs, potentially encouraging consumption and investments.
Summary: Policy Signals Boost Markets
The RBI’s December policy turned the market’s attention toward growth and stability. A 25 bps repo rate cut, paired with lower inflation projections and an upward revision in GDP estimates, triggered a wave of optimism across rate-sensitive sectors.
Banks, financial services, real estate, and automobiles were the key beneficiaries. The Sensex and Nifty responded with measurable gains, reflecting renewed market confidence.
With liquidity well-managed and borrowing costs eased, the policy sets the tone for sustained economic activity while reinforcing stability in the financial system.
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