Benchmark indices finished higher on Friday as markets reacted positively to the Reserve Bank of India’s 25-basis-point repo rate cut and fresh liquidity measures. The Sensex closed at 85,712.37, up 447.05 points, and the Nifty50 ended at 26,186.45, gaining 152.70 points, while most broader market indices also recorded gains.
Trading was volatile but ultimately constructive. The Nifty opened at 25,999.80, dipped briefly to 25,985, and then rallied to retest the 26,200 mark after the RBI reduced the repo rate to 5.25% and announced liquidity support through open market operations and a USD/INR swap. The Bank Nifty followed a similar trajectory, rebounding from 59,106.55 to an intraday high of 59,777.35.
Sector-wise performance was mixed. PSU banks, IT, financial services, and metals outperformed, driven by expectations of improved liquidity and lower borrowing costs. In contrast, media, FMCG, energy, and pharma ended the day weaker.
According to Vinod Nair, Head of Research at Geojit Financial Services, markets “enthusiastically responded to the RBI’s unexpected 25 bps rate cut,” noting that such a move seemed unlikely given strong Q2 GDP data. He said sharply lower inflation projections and liquidity support created a risk-on sentiment. Rate-sensitive sectors such as autos, real estate, and NBFCs registered strong gains, while private banks rose on treasury profit expectations, although concerns over net interest margins (NIMs) capped their upside.
Nair cautioned that while the short-term outlook remains cautiously positive, risks persist from a widening current account deficit and global trade uncertainty. He added that the US Federal Reserve’s stance on rate cuts will be critical in determining domestic momentum for the rest of the month.
Overall, investors welcomed the RBI’s move to ease financial conditions, though volatility is expected to continue as markets evaluate the transmission and impact of the rate cut and liquidity measures in the weeks ahead.
