Benchmark stock indices surged significantly on Friday, driven by regulatory easing from the Reserve Bank of India (RBI) that buoyed investor sentiment, especially in banking and infrastructure sectors.
The S&P BSE Sensex jumped 749.32 points to 82,111.19, and the NSE Nifty50 gained 235.70 points to 25,028.95 by midday. The rally followed the RBI’s announcement of relaxed provisioning norms for under-construction infrastructure projects, allowing banks and NBFCs to allocate less capital for potential loan defaults. This shift is expected to enhance credit flow into key sectors such as power, roads, housing, and railways.
As a result, infrastructure financing firms like Power Finance Corporation, REC, and IRFC saw strong intraday gains. Broader contributors to the rally included Jio Financial, Shriram Finance, Mahindra & Mahindra, and JSW Steel, along with blue-chip heavyweights Reliance Industries and SBI, both rising around 1-2%.
Market sentiment was largely bullish despite recent volatility in small and mid-cap (SMID) stocks. According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the Nifty may remain range-bound between 24,500 and 25,000, with potential for a breakout only if geopolitical tensions—particularly between Israel and Iran—ease. He also warned that small and mid-caps remain vulnerable, citing overvaluation and a shift in investor preference toward stable large-cap stocks in sectors like financials, industrials, autos, and real estate.
While RBI’s policy update lends domestic support, global headwinds persist. Rising crude oil prices, especially above $85/barrel, pose downside risks. Dr. Vijayakumar noted that geopolitical tensions and valuation pressures could cap gains unless there's positive news from the global front.
In summary:
-
RBI’s regulatory shift is enabling infrastructure-focused lending, triggering a bullish reaction.
-
Large caps are outperforming amid risk-off sentiment around SMID stocks.
-
Market trajectory remains uncertain, hinging on geopolitical developments and global commodity prices.
Investors appear cautiously optimistic, but continued vigilance is essential given the fragility of global risk factors.
